The U.S. dollar came under renewed pressure this week as markets increasingly priced in a possible interest rate cut by the Federal Reserve. Comments from Fed Chair Jerome Powell—emphasizing weakness in the labor market and the central bank’s flexibility in assessing economic data—fanned expectations that a move could come as soon as the upcoming October meeting.
Against safe-haven currencies such as the Japanese yen and Swiss franc, the dollar weakened. The euro also gained ground, with the EUR/USD pair trading above $1.16. Meanwhile, trade tensions between the U.S. and China added volatility, as reciprocal tariff threats weighed on sentiment.
Analysts warn that the dollar’s recent rebound may be short-lived, driven more by global rivals’ troubles than by improving U.S. fundamentals. Many expect renewed downward pressure over the next 3–12 months if rate cuts materialize and macro uncertainties persist.
In Asia, Japan’s finance minister publicly cautioned against “disorderly” yen moves after the currency slipped to multi-month lows. Japan’s political shifts—with the rise of conservative leadership—have fueled speculation of looser fiscal policies, further pressuring the yen.
In India, efforts are underway to modernize forex settlement infrastructure. The country’s GIFT City is collaborating with the Reserve Bank of India to enable real-time foreign exchange settlement for domestic banks—a move aimed at reducing transaction times and costs. If implemented nationwide, this could sharpen India’s position as a competitive forex hub.