The U.S. dollar extended its decline as dovish Fed commentary and weak regional data weighed on sentiment, while the euro gained on easing political tensions in Europe.
Key Insights:
• U.S. regional banks draw attention with rising loan quality concerns
• Euro gains ground as political tensions subside
Market Recap:
The US dollar extended its slide for a second day as Treasury yields moved lower, with investors responding to comments from Fed Chair Jerome Powell that offered no resistance to expectations of two rate cuts this year. Meanwhile, the pound regained earlier losses ahead of the release of August GDP figures.
Today's Market Watch:
The U.S. dollar extended its decline for a third session as soft regional Fed surveys and dovish signals from policymakers weighed on sentiment. Fed Governor Waller maintained a cautious stance, warning against cutting rates too quickly but remaining open to gradual 25bp adjustments, while Governor Miran reiterated his preference for a larger 50bp move this month. Regional data added to the downbeat tone, with the Philly Fed index sliding to -12.8 (vs. +10 expected) and the NY Fed’s services reading dropping to -23.8, highlighting signs of cooling economic activity.
The euro strengthened after French Prime Minister Lecornu comfortably overcame two no-confidence motions, reducing near-term political uncertainty and lifting EUR/USD to its highest level since early October. In contrast, the Australian dollar came under pressure as the latest jobs data showed unemployment rising to a four-year high, fuelling expectations of further easing by the Reserve Bank of Australia.
17th October 2025
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