The U.S. dollar was broadly stable early Tuesday, with currency markets pausing as investors waited for a large batch of delayed economic reports that could help clarify whether the Federal Reserve will move forward with an interest rate cut next month.
At 04:15 ET (09:15 GMT), the Dollar Index — which measures the greenback against six major peers — hovered around 100.072, showing little change.
Dollar Pauses Ahead of Key Data
Fed Governor Christopher Waller said Monday that the labor market has weakened enough to justify another quarter-point rate cut in December, echoing remarks from New York Fed chief John Williams late last week.
The dovish tone pushed rate-cut expectations sharply higher, with CME’s FedWatch tool placing the odds of a December cut at 81%, up from 42% just one week ago.
However, minutes from the Fed’s most recent meeting underscored ongoing disagreement among policymakers, making the incoming wave of data—delayed by the lengthy government shutdown—particularly important.
Figures on September producer prices and retail sales will be released later today, while the Fed’s preferred inflation measure, the PCE price index, is due Wednesday.
These reports will be the last major data points the Fed receives before its December meeting, as officials signaled that October’s inflation and jobs figures will likely never be published due to the shutdown.
“Markets are back to pricing in 19bp of easing for December, but the dollar has remained resilient,” analysts at ING wrote. “Some year-end rebalancing flows before Thanksgiving may be getting in the way, but unless markets have a hawkish rethink, the dollar looks too strong relative to short-term rate differentials at these levels, and we see some material downside risks.”
ING: Euro Undervalued Against the Dollar
In Europe, EUR/USD edged 0.1% higher to 1.1529 after modest overnight gains.
Fresh data confirmed that Germany’s economy was flat in the third quarter of 2025 — in line with the initial estimate — and followed Monday’s Ifo survey showing German businesses turning more cautious, pointing to a difficult end to the year.
“The EUR is yet to see any real benefit from the Ukraine peace talks, and is trading at a wide 2% undervaluation vs USD as of this morning,” ING noted.
GBP/USD also ticked up 0.1% to 1.3114, with nerves building ahead of Wednesday’s U.K. budget.
Finance minister Rachel Reeves is expected to resort to tax increases to hit fiscal goals but may be reluctant to further slow an already fragile economy.
Yen Remains in Intervention Territory
In Asia, USD/JPY slipped 0.1% to 156.62, keeping the yen at levels that have previously prompted direct action from Japanese authorities.
Tokyo officials have issued repeated warnings about further yen weakness, though no actual intervention has yet been observed.
“Thinner liquidity around Thanksgiving could present good conditions for the BoJ to intervene in USD/JPY, ideally after a market-driven correction in the pair,” said ING. “U.S. data might potentially offer the trigger for that correction, but not today in our view.”
USD/CNY dipped 0.1% to 7.0949 as the yuan firmed slightly, helped by hopes of improved ties between Washington and Beijing. U.S. President Donald Trump announced plans to visit China in April.
Elsewhere, AUD/USD slipped 0.1% to 0.6455, and NZD/USD fell 0.2% to 0.5599 ahead of the Reserve Bank of New Zealand’s latest policy decision later in the session.
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