#FedRateCutAffectsDollarTrend When the Federal Reserve (Fed) cuts interest rates, it typically affects the U.S. dollar's trend in several ways. Here’s how you can identify its impact on the dollar: 1. Short-Term Reaction: Dollar Weakening A Fed rate cut usually leads to a decline in the U.S. dollar’s value because lower interest rates make the currency less attractive to investors seeking higher returns. You can monitor immediate market reactions through the DXY (U.S. Dollar Index) or USD exchange rates against major currencies like the EUR/USD or USD/JPY. 2. Market Expectations Matter If the rate cut is widely expected, the dollar may have already priced in the impact, leading to a more muted reaction. If the Fed surprises markets with a larger cut, the dollar could drop more sharply.