The US Dollar Index (DXY) traded higher near 97.40 in early European hours on Friday, extending its gains after the Federal Reserve (Fed) cut interest rates as expected but signaled little urgency for further easing.
Fed delivers measured cut
On Wednesday, the Fed reduced its benchmark rate by 25 basis points (bps), in line with market expectations. Chair Jerome Powell described the move as a risk-management response to a softening labor market, stressing that future policy adjustments would follow a “meeting-by-meeting” approach rather than a pre-set path.
Investor reaction
“Investors judged the Fed’s guidance less dovish than anticipated,” noted MUFG analyst Soojin Kim. “Chair Powell highlighted tariff-driven inflation risks and reinforced the cautious tone, which ultimately supported the dollar.”
Political developments add uncertainty
In a separate development, CNBC reported that a US court blocked President Donald Trump’s attempt to replace Fed Governor Lisa Cook, who was appointed under former President Joe Biden. The White House has accused Cook of mortgage fraud linked to government-backed loans, though no formal charges have been filed and she has denied the allegations. Renewed scrutiny over the Fed’s independence could introduce headwinds for the DXY in the sessions ahead.
