US Dollar Index rebounds to near 107.00 as US Retail Sales data loom

The US Dollar trades with mild gains to near 106.90 in Tuesday’s early European session.
The Fed is expected to lower interest rates by 25 bps on Wednesday at the end of its two-day meeting.
The US Retail Sales data for November will be released later on Tuesday.

Lallalit Srijandorn FXStreet

The US Dollar Index (DXY) posts modest gains to around 106.90 against major currencies during the early European session on Tuesday. Traders will keep an eye on the US November Retail Sales, which are due later on Tuesday. The attention will shift to the Federal Reserve (Fed), Bank of Japan (BoJ), and the Bank of England (BoE) interest rate decision this week.

The US Fed is likely to cut interest rates for the third time at its December meeting on Wednesday, bringing its overnight borrowing rate down by a quarter percentage point to a range of between 4.25% and 4.50% from its current range of between 4.50% and 4.75%. The markets are now pricing in a nearly 95.4% chance of a 25 basis points (bps) cut at the Fed's December meeting, compared with about a 78% chance a week ago, according to the CME FedWatch tool.

Traders will closely monitor Fed Chair Jerome Powell's press conference and Summary of Economic Projections (dot-plot) after the meeting. Any signs of hawkish cuts by the US central bank could provide some support to the US dollar against its rivals. "The U.S. dollar has been at the mercy of headlines not only just surrounding what the Fed is going to do but whether it's going to be deemed a hawkish cut," noted Juan Perez, director of trading at Monex USA in Washington, D.C.

S&P Global revealed in its preliminary report on Monday that the US Composite PMI, which takes both the services and the manufacturing business activity into account, came in at 56.6 in December's flash estimate from 54.9. This figure registered the highest level in 33 months.

Additionally, the Services PMI improved to 58.5 in December from 56.1 in November, above the market consensus of 55.7. On a negative note, the Manufacturing PMI declined to 48.3 in December versus 49.7 prior, weaker than the 49.4 expected. Traders will take more cues from the US Retail Sales data later in the day. If the stronger sales figures showed weaker outcomes, this could weigh on the US Dollar.

US Dollar FAQs

What is the US Dollar?

The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from the Bank for International Settlements. Following the Second World War, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold until the Bretton Woods Agreement in 1971, when the Gold Standard went away.

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

AUD/USD turns lower toward 0.7000 after mixed Australian jobs data

AUD/USD is losing ground toward 0.7000 in the Asian session on Thursday, following the release of the Australian August jobs report, which showed that the Unemployment Rate rose to 4.6% versus 4.5% expected, while Employment Change beat estimates, arriving at 39.5K. Traders also remain unnerved ahead of the critical Trump-Xi meeting.

USD/JPY keeps the red near 158.00 as Japanese Yen firms up

USD/JPY retreats from three-week highs and holds losses near 158.00 in the Asian session on Thursday. Surging Japanese bond yields lift the Yen amid looming intervention risks, while the US Dollar preserves overnight gains to a two-month high amid hawkish Fed bets and elevated US bond yields.

Gold bears tighten their grip as Fed rate hike bets rise

Gold sticks to a negative bias for the second straight day, trading below the $4,300 mark or a one-week low during the first half of the European session as traders await a crucial meeting between US President Donald Trump and his Chinese counterpart Xi Jinping. Expectations for a major announcement are low, though market players will look for any progress on rare earths, technology restrictions, and an extension of the current US-China truce.

XRP is flashing three bullish signals heading into a historically weak October

XRP (XRP) is still flashing 3 bullish signals across its holders, derivatives, and ETF data. These signals come as the token gave back part of its September gains on Thursday. The token traded near $1.50 at press time, down about 6.3% over 24 hours, according to BeInCrypto Markets data. The pullback still leaves XRP up over 15.6% on the week, a gain that tracks a broader market rally.

Advanced economies: From one example of resilience to another

History tends to repeat itself in advanced economies. Once again, growth ultimately fell short of expectations by only a small margin in the first half of 2026, despite the conflict in Iran. As early as 2025, the impact of tariffs was less severe than feared.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.