FX.co ★ Dollar Firms Up as Traders Reassess Fed Outlook

The dollar index remained stable around 97.4 on Friday following a rise over the previous two sessions, prompted by the Federal Reserve's unexpectedly less dovish policy stance. Earlier this week, the Fed implemented a widely anticipated quarter-point rate cut and forecasted two additional cuts this year, contrasting with a single projected cut in 2026. Fed Chair Jerome Powell characterized this action as a precautionary measure given the deceleration in the labor market, emphasizing that there was no urgency to hasten policy easing. The dollar also gained strength from data indicating a drop in new jobless claims last week, countering the previous week's surge. In parallel monetary developments, the Bank of Canada reduced its rates, whereas the Bank of England maintained its current policy. The dollar index is poised to close the week with minimal change, recovering most of the losses sustained earlier in the week.