- The Federal Reserve is widely expected to cut the policy rate by 25 basis points at the last meeting in 2024.
- The Fed Chairman’s comments and the revised dot chart could provide important clues about the outlook for interest rates.
- The valuation of the US Dollar could be significantly affected heading into the Christmas holidays.
The US Federal Reserve (Fed) will announce monetary policy decisions after the December monetary policy meeting on Wednesday. Along with the policy statement, the US central bank will release the revised Summary of Economic Projections (SEP), also known as the dot chart.
The CME FedWatch tool shows that investors are fully pricing in a 25 basis point Fed cut, which would bring the policy rate to the 4.25%-4.5% range. Market positioning suggests that the US Dollar’s (USD) reaction to the interest rate decision alone could be short-lived. Instead, investors will evaluate the details of the dot chart and examine Fed Chairman Jerome Powell’s comments at the post-meeting press conference.
The September SEP showed that Fed officials’ median view of the federal funds rate at the end of 2025 stood at 3.4%. Revisions to interest rate expectations, inflation and growth projections for next year could provide important clues on the policy outlook and affect the valuation of the USD.
Ahead of the Fed’s final policy meeting of the year, “the FOMC is expected to announce an additional rate cut, with the Committee reducing rates by 25 basis points to 4.25%-4.50%,” TD Securities analysts said in a recently published report, adding:
“While we believe the Fed will remain interested in projecting further policy easing for 2025, our view is that guidance on the pace of rate cuts will be more cautious going forward. This could be interpreted as a line rate cut tough on the part of market participants.”
economic indicator
FOMC press conference
The press conference lasts approximately one hour and is divided into 2 parts: first a prepared statement is read and then the turn for questions from the press begins. These questions often provoke improvised responses that create volatility in the markets.
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When will the Fed announce its interest rate decision and how could it affect EUR/USD?
The US Federal Reserve is scheduled to announce its interest rate decision and release monetary policy with the revised dot chart on Wednesday at 19:00 GMT. This will be followed by Fed Chairman Jerome Powell’s press conference, which will begin at 19:30 GMT.
An upward revision of the interest rate projection for the end of 2025 could be assessed as a hawkish tilt in the policy outlook and trigger a USD rally with immediate reaction, sending EUR/USD lower. On the other hand, a downward revision could have the opposite effect on the pair’s action.
Powell is likely to be asked whether policymakers took into account US President-elect Donald Trump’s proposed policies, especially regarding tariffs, when drafting their projections for the next anus.
Should Powell signal that they will take a gradual approach to further policy easing due to the uncertainty created by potential tariffs on the inflation outlook, the USD could maintain its strength. On the other hand, if Powell downplays inflation concerns and reiterates his willingness to keep the labor market strong next year, this could be seen as a dovish tone and make it difficult for the USD to hold firm against its rivals. In this scenario, EUR/USD could stage a rebound in the short term.
Eren Sengezer, Lead Analyst for the European session at FXStreet, provides a short-term technical outlook for EUR/USD:
“EUR/USD remains technically bearish in the near term as it remains within the descending regression channel since late September. Furthermore, the Relative Strength Index (RSI) indicator on the daily chart remains near 40, highlighting the lack of buyer interest.”
“On the downside, 1.0400 (static level) is lined up as immediate support before 1.0260 (lower boundary of descending channel) and 1.0200 (static level, round level). In case EUR/USD rises above 1.0600, where If the 23.6% Fibonacci retracement level of the October-December downtrend is found, and start using this level as support, sellers could get discouraged. In this scenario, 1.0690-1.0700 (50-day SMA, 38.2% Fibonacci retracement) and 1.0800 (50% Fibonacci retracement) could be seen as the next resistance levels.”
US Dollar FAQs
The United States 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 in circulation alongside local banknotes. According to 2022 data, it is the most traded currency in the world, with more than 88% of all global currency exchange operations, equivalent to an average of $6.6 trillion in daily transactions. After World War II, the USD took over from the pound sterling as the world’s reserve currency.
The single most important factor influencing the value of the US Dollar is monetary policy, which is determined by the Federal Reserve (Fed). The Fed has two mandates: achieve price stability (control inflation) and promote full employment. Your main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% target set by the Fed, the Fed raises rates, which favors the price of the dollar. When Inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the Dollar.
In extreme situations, the Federal Reserve can also print more dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit into a clogged financial system. This is an unconventional policy measure used when credit has dried up because banks do not lend to each other (for fear of counterparty default). It is a last resort when a simple lowering of interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis of 2008. It involves the Fed printing more dollars and using them to buy US government bonds, primarily from financial institutions. QE usually leads to a weakening of the US Dollar.
Quantitative tightening (QT) is the reverse process by which the Federal Reserve stops purchasing bonds from financial institutions and does not reinvest the principal of maturing portfolio securities in new purchases. It is usually positive for the US dollar.
Source: Fx Street

I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.