#FedRateCutAffectsDollarTrend The Federal Reserve's (Fed) interest rate decisions have a strong impact on the U.S. dollar's trend. Here’s a general breakdown of how they relate: Fed Rate Hikes (Tightening Policy) → Stronger Dollar Higher interest rates attract foreign investment, increasing demand for the dollar. Borrowing becomes more expensive, potentially slowing the economy but strengthening the currency. Fed Rate Cuts (Easing Policy) → Weaker Dollar Lower interest rates make the dollar less attractive to investors. Increased liquidity can boost economic activity but also lead to inflation, weakening the currency. Current Trend (2024-2025) The Fed has kept rates high to control inflation, supporting a strong dollar. If the Fed signals rate cuts (expected in mid-to-late 2024), the dollar may weaken. Global factors, such as economic slowdown or geopolitical risks, could influence demand for the dollar as a safe-haven asset.