#FedRateCutAffectsDollarTrend Federal Reserve (Fed) interest rate cuts generally lead to a depreciation of the U.S. dollar. Here’s a concise overview of how this process unfolds: 1. Lower Interest Rates Reduce Investment Appeal: When the Fed cuts interest rates, returns on U.S. assets decrease, making them less attractive to both domestic and foreign investors. This diminished appeal often leads to reduced demand for the dollar.  2. Increased Money Supply: Rate cuts typically result in a more abundant money supply, as borrowing becomes cheaper. This increase in dollar availability can further weaken its value.  3. Market Expectations and Speculation: Anticipation of rate cuts can prompt traders to adjust their positions, selling off dollars in expectation of a decline in value, thereby accelerating the dollar’s depreciation.  Recent Observations: • Despite expectations that President Trump’s policies would bolster the dollar, recent Fed rate cuts have contributed to a 2% decline in its value against other currencies.