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Dollar Steadies Ahead of ECB and BoE Decisions as Markets Turn Risk-Off 
Trump Lifts 25% Tariff on Indian Goods in Strategic U.S.–India Trade and Energy Deal 
The U.S. dollar traded steadily on Wednesday, hovering close to its lowest level since early October as fresh economic data reinforced concerns about a softening labor market and uncertainty over the Federal Reserve’s next interest rate move. Investors remain cautious, closely watching upcoming inflation data for clearer signals on the timing of potential rate cuts.
The dollar index, which tracks the greenback against six major currencies, stood at 98.193, near the October 3 low reached earlier in the week. The index is down roughly 9.5% so far this year, putting it on track for its steepest annual decline since 2017. Weakening expectations around U.S. monetary tightening have weighed heavily on the currency.
Recent labor market data showed the U.S. economy added 64,000 jobs in November, beating market expectations. However, the unemployment rate rose to 4.6%, with analysts noting that the prolonged government shutdown distorted the figures. Market participants remain unconvinced that the data materially alters the Federal Reserve’s policy outlook, especially with inflation figures still pending.
The Fed delivered a widely expected rate cut last week but signaled limited appetite for further easing, projecting just one additional cut in 2026. In contrast, financial markets are pricing in two cuts next year, though expectations for a January move remain low. Analysts suggest that unless inflation cools more sharply, a March rate cut may also be premature.
In currency markets, the euro traded near a 12-week high at $1.1751 ahead of the European Central Bank’s policy decision, where rates are expected to remain unchanged. Sterling held steady around $1.3424 following weak UK labor data that strengthened expectations for a Bank of England rate cut. Meanwhile, the Japanese yen firmed to around 154.56 per dollar as markets anticipate a Bank of Japan rate hike to a multi-decade high, driven by inflation pressures and concerns over a weak yen.
With multiple major central bank meetings and key inflation data ahead, global currency markets are likely to remain volatile as investors reassess interest rate trajectories into 2026.
