Forex analytics. The dollar was saved by the “hawks” – ForexNews.PRO
Thoughts are material. Investors were worried about the “hawkish” rhetoric of the minutes of the October FOMC meeting. In their opinion, Fed officials should have dissuaded the market from lowering the federal funds rate in December. In the end, that’s exactly what happened. Moreover, the signals turned out to be unexpectedly strong, which put an end to EURUSD’s attempts to launch a counterattack.
In October, several non-voting members of the FOMC expressed disagreement with the easing of monetary policy. Some of those who supported the decision to lower rates were doubtful. Many officials called the December monetary expansion inappropriate. There were clearly more of them than a few who considered the continuation of its cycle at the end of 2025 possible.
The hawks had clearly pecked at the pigeons. Coupled with the BLS’s statement about the unavailability of the October report on American employment, this lowered the chances of a reduction in the federal funds rate from 46% to 33%. The “bears” on EURUSD couldn’t help but take advantage of such a gift.
The US dollar was supported by the rebound of American stock indexes from the local bottom due to NVIDIA’s strong report for the third quarter. Investors felt that the world’s largest company had saved the market. However, I do not think that the S&P 500 will zealously begin to restore the uptrend. Most likely, volatility will continue to rise, which is bad news for the greenback.
According to Goldman Sachs, investors should pay attention to the relationship between the USD index and the VIX. Over the past five years, the US dollar has had an inverse correlation with the fear index. However, in 2025, due to the uncertainty of the White House’s policy, it lost its status as a safe haven currency. Greenback is perceived as a risky asset, so an increase in stock market volatility leads to its decline and vice versa.
In my opinion, the EURUSD peak is nothing more than a healthy correction. In the minutes of the October FOMC meeting, officials considered a reduction in the federal funds rate after December appropriate. The futures market estimates the chances of a January cut at 65%, including 15% for 50 bp. They have changed little since the publication of an important document.
In addition, the White House’s pressure on the Fed is returning. Donald Trump, dissatisfied with the central bank, promised to fire not only Jerome Powell, but also Scott Bessent, who defended him. Add to this the negative consequences for the US economy of the shutdown and the cancellation of tariffs by the Supreme Court, and the prospects for a greenback will definitely become “bearish.”
