Post-FOMC weakness: US Dollar breakdown continues after 25bps cut

The US Dollar took a hit following yesterday's Fed decision, driven by mechanical flows typical after a rate cut.

Given the rally to new cycle highs over the past two months, current outflows aren't surprising—benefiting not just the majors, but especially exotic currencies.

Prior to the meeting, the Dollar had held relatively strong despite a dovish Fed repricing, ranging near its recent highs supported by elevated yields following Williams' comments.

However, despite the Dot Plot projecting only ~2 cuts for 2026 and Chair Powell suggesting the US is entering the "high end of the neutral rate range," the Dollar is sliding back to mid-October levels.

The cut itself was neither explicitly dovish nor hawkish; communications were solid.

If you missed Powell's speech (great recap right here), he placed extra emphasis on inflation. Consequently, as noted yesterday, future inflation data may carry even more weight than the NFP (which is projected to ease gradually over the next year).

The Fed has been driving blind with limited inflation reports since September due to the government shutdown, making upcoming prints critical for markets.

November NFP is scheduled for December 16, followed by CPI on Dec 18.

Let's dive into the Dollar Index (DXY) charts to spot how much deeper the Dollar can correct given this shift in fundamentals.

Read More:

• Markets Today: SNB Hold Rates, SoftBank Falls 7.7%, Gold Slips Post FOMC. DAX Holds Above Psychological 24000 Handle
• Nasdaq 100: Post-FOMC gains wiped out, but technicals are still bullish
• Markets higher after the Fed Cut, but Concerns Remain – North American session Market Wrap for December 10

The Dollar is falling harshly after trying to hold its elevated range, nothing too surprising here – Yesterday's move was based from its 200-Day Moving Average acting as resistance and now breaking below its key Pivot Area rendering the DXY bearish short-term.

Looking back even further, the US Dollar is holding a long-term rangebound trajectory since mid-2025 between 97.00 to 100.00 – Makes sense when looking at its first-half harsh fall (-12% since January).

On the bigger picture, cuts have been expected for a long-time in the US so yesterday did not surprise Macro traders too much.

Still, with the Daily RSI going towards the bearish territory and momentum getting strong, the fall should continue at least towards the 98.00 Support area, allowing other majors to appreciate.

Keep a close eye on the Dollar Bear Channel in Intraday timeframes which should guide short-term flows.

Levels to place on your DXY charts:

Resistance Levels

• 100.00 to 100.50 Main resistance zone
• 100.376 November highs
• 99.80 mini-resistance
• 98.50 to 98.80 Pivot Zone

Support Levels

• 98.25 Lower bound of 4H Channel
• 98.00 Key support (+/- 100 pips) Next support
• 97.40 to 97.80 August Range Support
• 2025 Lows 96.40 to 96.80 Support

Watch to the reactions as the Dollar reaches the lower bound of the Channel between 98.20 to 98.30 and spot how other assets correlate.

There has been profit-taking flows overnight in Equities so keep an eye on this and flows in other FX currencies throughout the session.

Safe Trades!

Follow Elior on Twitter/X for Additional Market News, interactions and Insights @EliorManier