Dollar Tumbles as Traders Eye Fed Meeting: Rate Cut Anticipations Soar

The U.S. dollar dipped slightly against major currencies as traders await the Federal Reserve meeting next week, where a rate cut is highly anticipated. A 90% probability of a rate cut has been priced in by traders. Markets are also speculating potential movements by other central banks globally.

The U.S. dollar edged down slightly on Friday, yet remained within its recent range against major currencies. This drop comes as financial markets eagerly anticipate next week's Federal Reserve meeting, with expectations of an interest rate cut growing strong.

The dollar index slipped 0.1%, bringing it to 98.994, still close to Thursday's five-week low. According to LSEG data, there is nearly a 90% likelihood of a Fed rate cut next week. Strategists from Morgan Stanley forecast a quarter-percentage point cut in December, aligning their expectations with those of JPMorgan and BofA Global Research.

In light of these developments, the dollar continues to be viewed as overvalued relative to its peers. Meanwhile, central banks worldwide, including the Bank of Japan and the European Central Bank, are set to make their own policy decisions soon, making for a potentially volatile financial landscape.

(With inputs from agencies.)