The US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, is trading flat near 99.45 in early European hours on Tuesday. The index has moved into consolidation mode after recovering from Monday’s monthly low around 99.00.
Fed rate-cut expectations keep USD outlook uncertain
Despite the modest rebound, the broader outlook for the US Dollar (USD) remains unclear as markets grow increasingly confident that the Federal Reserve (Fed) will cut interest rates next week. According to the CME FedWatch Tool, traders are pricing in an 87.2% probability of a 25-basis-point cut at the December policy meeting, bringing the target range to 3.50%–3.75%.
Monday’s weaker US ISM Manufacturing PMI added to the dovish sentiment. The November reading fell to 48.2, below expectations of 48.6 and down from October’s 48.7, reinforcing the view that economic momentum is cooling and that additional policy support may be warranted.
Attention turns to ADP employment and ISM services data
Markets now shift their attention to the upcoming US ADP Employment Change and ISM Services PMI data, both due on Wednesday. These releases will offer fresh insight into labor market conditions and service-sector activity – key components in shaping the Fed’s near-term policy path.
Economists forecast private-sector job growth of just 10K for November, a sharp slowdown from the 42K jobs added in October. Meanwhile, the ISM Services PMI is expected to edge down to 52.1 from 52.4, signaling a moderate loss of momentum in the services economy.
