Fed cuts interest rates to 5%, weakening the US Dollar as markets await key economic data and unemployment claims.

The dollar index (DXY), which measures the greenback against a basket of six peers, was down 0.069% to 100.950 after reversing gains made in early trading. It slid to its lowest in more than a year of 100.21 in the previous session. Despite early weakness, the dollar rebounded sharply as Treasury yields rose, driven by stronger-than-expected weekly jobless claims data. GBP/USD hit its highest since March 2022 after the Bank of England held rates steady, boosting sterling 0.60% against the dollar. The Fed’s dovish tone raises short-term headwinds for the U.S. dollar, but strong fundamentals may support the greenback’s resilience. Treasury yields, particularly the 10-year yield, rose as investors bet on a soft landing for the U.S. economy, fueled by an unexpected drop in jobless claims. Weekly jobless claims fell by 12,000 to 219,000, far below expectations, signaling continued labor market strength.