USD Gives back All Gains After the 25 bps FED Rate Cut

After the 25 bps FED rate cut which was anticipated, the USD initially surged by 50 pips but has since given up all those gains. Before the announcement, markets were expecting 110 basis points of rate cuts in 2025 and a 70% chance of another rate cut in December. At that time, 2-year rates stood at 4.21%, and USD/JPY was trading around 152.90.

The statement prompted a mild hawkish reaction, lifting USD/JPY to 153.45 and 2-year yields by 2 basis points. However, following Powell’s press conference, the USD reversed direction, and USD/JPY has since dropped back below 153. EUR/USD also fell, slipping below 1.08 but has climbed back up above this level now.

The FED cut rates by 25 basis points, bringing them to 4.75%, in line with expectations. The statement removed a key phrase signaling confidence in inflation nearing the 2% target and noted a slight slowdown in job gains. The FED maintains a readiness to adjust policy if necessary, with no dissenting votes recorded.

Key Points from the November 7 FED Policy Meeting and Rate Decision

• Interest Rate Change
  • FED lowered rates by 25 basis points to 4.75% (down from the prior 5.00%).
  • The cut was fully anticipated and priced in by the market.
• Statement Adjustments
  • Removed the phrase “the Committee has gained greater confidence that inflation is moving sustainably toward 2 percent.”
  • Reaffirmed that economic activity “has continued to expand at a solid pace.”
• Labor Market Update
  • Noted that “job gains have slowed, and the unemployment rate has moved up but remains low,” replacing the previous language that labor market conditions “have generally eased.”
• Inflation and Policy Outlook
  • Repeated that inflation has shown progress toward the 2% target.
  • Reaffirmed readiness to adjust monetary policy as needed.
• Dissenting Opinions
  • No dissents in this decision.

USD/JPY Live Chart

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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