When the Fed (FOMC) cuts interest rates, it usually makes the U.S. dollar less attractive because investors earn less from dollar-based investments. But sometimes, the dollar can still go up (bullish) after a rate cut. Here’s why, in simple terms:
A thread 🧵
1. Market Already Expected It: If everyone already knew the Fed would cut rates, the market had time to adjust before it happened. Traders then focus on what the Fed says about the future, not the cut itself.
2. Fed Sounds Confident: If the Fed suggests this might be the last..
cut for a while or says the U.S. economy is strong, it can make the dollar look good.
3. Global Problems: When there’s trouble in other countries, like a weak economy or unstable markets, people buy dollars because it’s seen as safe, even …
When the Fed (FOMC) cuts interest rates, it usually makes the U.S. dollar less attractive because investors earn less from dollar-based investments. But sometimes, the dollar can still go up (bullish) after a rate cut. Here’s why, in simple terms:
A thread 🧵
1. Market Already Expected It: If everyone already knew the Fed would cut rates, the market had time to adjust before it happened. Traders then focus on what the Fed says about the future, not the cut itself.
2. Fed Sounds Confident: If the Fed suggests this might be the last..
cut for a while or says the U.S. economy is strong, it can make the dollar look good.
3. Global Problems: When there’s trouble in other countries, like a weak economy or unstable markets, people buy dollars because it’s seen as safe, even if U.S. rates are lower.