The US Dollar fell sharply on Wednesday after the Federal Reserve cut interest rates. The US Dollar Index dropped to multi-week lows, landing between 98.60 and 98.50, partly due to declining yields after the FOMC meeting. Important US data on the horizon includes Balance of Trade, Initial Jobless Claims, and Wholesale Inventories. EUR/USD bounced back, recovering from four days of losses and nearing the 1.1700 mark. We can expect Germany’s Inflation Rate data soon. GBP/USD also rose, edging close to monthly highs near 1.3400, with key data coming from the RICS House Price Balance and a speech by BoE’s Kroszner. Meanwhile, USD/JPY fell significantly, dropping toward the 155.80 area, and upcoming data includes Japan’s BSI Large Manufacturing Index and Foreign Bond Investment figures.

The Commodities Market

The AUD/USD climbed to its highest point since mid-September, around 0.6680, with attention on the upcoming Australian labor market report. In the meantime, WTI crude oil rose back to $59.00 per barrel, driven by geopolitical concerns and the Fed’s changes. Gold prices increased to three-day highs, nearing $4,240 per troy ounce, while silver continued to rise, approaching $62.00 per ounce. With the Federal Reserve cutting rates, the US Dollar’s decline is a central theme for trading. We’re seeing a classic “risk-on” environment, so it may be wise to sell the dollar against other major currencies. The upcoming Initial Jobless Claims data will be critical; if the number exceeds the recent average of about 220,000, it may confirm a cooling labor market and weaken the dollar further. Given the dollar’s drop, we are considering buying EUR/USD call options, especially as it nears the 1.1700 level. The European Central Bank has been cautious about cutting rates, which supports the euro’s value. Tomorrow’s German inflation data will be important; a stable figure around 2.5% would strengthen our position. The Australian dollar also presents a solid short-term opportunity ahead of its jobs report. We could see AUD/USD pushing above 0.6700 if the employment data shows strength, a trend we’ve noticed in 2025. With Australia’s unemployment rate staying below 4.0% this year, a positive surprise seems more likely.

Opportunities in Commodities

In commodities, gold’s rise to $4,240 directly reflects the impact of lower US interest rates and a weaker dollar. This is a reliable historical trend, so it makes sense to consider adding to our gold positions or investing in related derivatives. Silver’s rise above $60.00 shows strong speculative interest, which could drive its price even higher in the coming weeks. Oil is also showing strength, with WTI above $59 as the weaker dollar makes it cheaper for international buyers. Ongoing geopolitical tensions and OPEC+’s commitment to production cuts through the end of 2025 further support this trend. Given this backdrop, we should be ready for oil prices to test higher levels. Create your live VT Markets account and start trading now.

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