#FedRateCutAffectsDollarTrend Federal Reserve interest rate cuts tend to depreciate the US dollar. This occurs because lower interest rates reduce demand for the dollar, as investors seek higher returns. Simultaneously, selling dollars increases its supply, further weakening its value. Finally, investors may switch to other currencies offering higher yields. While these are typical effects, the dollar's actual performance is also impacted by economic indicators, global events, and market sentiment.