The US dollar steadied on Tuesday as traders awaited a widely expected interest-rate cut from the Federal Reserve, while the Australian dollar strengthened after the Reserve Bank of Australia signaled no further near-term easing.

Investors are positioning ahead of the Fed decision, with several other major central banks also set to announce policy moves before the end of the week.

Michael Pfister, FX strategist at Commerzbank, said, “The Fed meeting is tomorrow, so we’re unlikely to see major repositioning before then.”

The dollar index, which measures the US currency against six major peers, slipped 0.1% to 98.977.

Traders also look ahead to the NFIB Small Business Index for November and October’s JOLTS job openings data due later in the session.

Bond investors have scaled back expectations for the pace of rate cuts in 2026, as doubts grow over whether Kevin Hassett — widely viewed as the frontrunner to succeed Jerome Powell when his term ends in May — will be as dovish as President Donald Trump hopes.

Even so, markets see this week’s Fed cut as virtually assured, shifting the focus toward next year’s outlook.

Pfister noted that once the policy statement is released, attention will center on the Dot Plot, pointing to widening disagreement among Fed officials. He added that lower rate-path projections compared with the previous meeting may not offer much support for the dollar.

According to CME’s FedWatch tool, futures imply an 89.4% probability of a 25-basis-point cut at the December 9–10 meeting.

The US 10-year Treasury yield dipped one basis point to 4.1605% after three consecutive sessions of gains to near three-month highs.

Analysts at ING wrote, “Markets have quickly repriced toward higher rates, and the new levels appear justified by fundamentals.”

Euro edges higher… Australian dollar extends gains

The euro rose after Monday’s selloff in German bonds, following comments from ECB Executive Board member Isabel Schnabel, who told Bloomberg the bank’s next move could be a rate hike rather than a cut — though not in the near term. The single currency was up 0.1% at $1.1653.

The Australian dollar maintained its upward tone, rising 0.3% to $0.6645 after the RBA held rates at 3.6% for a third straight meeting and warned that inflation pressures could persist.

Sim Moh Siong, FX strategist at Bank of Singapore, said, “The RBA did not attempt to push back against the market’s hawkish expectations… what was said aligns with the view that the bank is leaning more toward tightening.”

Gains accelerated after Governor Michele Bullock confirmed in a press conference that rate cuts are no longer on the table.

Pfister of Commerzbank added, “The press conference made it clear that cuts are finished — and that the next move could be a hike. That was enough to lift the Aussie.”

Quake pressures yen… yuan and pound rise

The Japanese yen slipped 0.1% to 155.82 per dollar after an initial uptick in early Asian trading, which followed a powerful 7.5-magnitude earthquake in northeastern Japan that triggered evacuation orders and a tsunami warning later downgraded.

Tony Sycamore, market analyst at IG in Sydney, said the initial shock revived concerns about supply-chain fragility, insurance losses, and potential disruptions to industrial output — adding to caution ahead of central bank decisions.

The offshore Chinese yuan rose 0.1% to 7.0623 per dollar as investors interpreted Monday’s Politburo meeting statement as signaling no urgency for additional stimulus.

Sterling climbed 0.2% to $1.33470, while the New Zealand dollar rose 0.3% to $0.57920.

Silver prices rose in European trading on Tuesday, resuming the gains that paused briefly yesterday amid a correction and profit-taking, and moving once again toward their all-time highs. The advance is supported by the current weakness in the US dollar against a basket of major currencies, pressured by expectations of an interest-rate cut from the Federal Reserve this week.

Silver may surpass the $60 per-ounce mark for the first time in history this week if the outcome of the Federal Reserve’s policy meeting proves less hawkish than markets currently anticipate.

Price Overview

• Today’s silver price: Silver climbed 1.35% to $58.93, from an opening level of $58.15, and recorded a low of $57.61.

• At Monday’s settlement, silver fell 0.3% due to correction and profit-taking, after prices hit an all-time high of $59.33 per ounce on Friday.

US Dollar

The US Dollar Index fell 0.1% on Tuesday, resuming losses that had paused yesterday during a short period of consolidation, reflecting renewed weakness in the American currency against a basket of global peers.

Muted economic data continues to emerge from the United States. The latest core PCE figures showed only a slight increase in prices, reinforcing signs of stabilizing inflation in the world’s largest economy.

US Interest Rates

According to CME’s FedWatch tool, markets are pricing an 89% probability of a 25-basis-point rate cut at this week’s meeting, with an 11% probability of no change.

Federal Reserve

Later today, the Fed begins its final monetary-policy meeting of the year, with decisions set for Wednesday. Expectations point to a 25-basis-point cut in the benchmark rate — the third consecutive cut this year.

The policy statement, economic projections, and comments from Chair Jerome Powell are expected to offer strong signals regarding the outlook for continued monetary easing and the path of rate cuts in 2026.

Bullish Expectations

Many analysts expect silver to remain in a strong upward trend that could drive it toward fresh record highs in the period ahead.

Estimates suggest the metal could trade above $60 per ounce for the first time in history before the end of the year, supported by rising demand from retail investors and growing concerns about tightening supply in global markets.

Gold prices rose in the European market on Tuesday, moving higher toward a six-week peak, supported by continued weakness in the US dollar against a basket of global currencies as markets price in a potential Federal Reserve rate cut this week.

Gains remain limited as investors stay cautious ahead of the Fed’s final policy meeting of the year, which begins later today, with the decision due on Wednesday.

Price Overview

• Gold prices today: Gold rose by 0.4% to $4205.58, up from an opening level of $4,190.18, after touching an intraday low of $4,170.12.

• At Monday’s settlement, gold fell 0.2%, marking its fourth decline in five sessions amid profit-taking from last week’s six-week high of $4,264.60 per ounce.

US Dollar

The US Dollar Index fell 0.1% on Tuesday, extending losses after a brief pause the previous day, reflecting renewed weakness in the American currency against a wide basket of global peers.

Recent US data continues to show a soft economic tone. The latest core personal consumption expenditure (PCE) figures revealed only a slight increase in prices, reinforcing signs of stabilizing inflation in the world’s largest economy.

US Interest Rates

According to CME’s FedWatch Tool, markets currently price an 89% probability of a 25-basis-point rate cut at this week’s meeting, with an 11% chance of no change.

Federal Reserve

The Fed’s final policy meeting of the year begins later today, and the decision will be announced on Wednesday. Markets expect a 25-basis-point cut — the third consecutive cut this year.

Monetary policy statements, updated economic projections, and comments from Fed Chair Jerome Powell are expected to provide clearer guidance on how far the easing cycle could extend into 2026.

Gold Outlook

• OANDA senior market analyst for Asia-Pacific, Kelvin Wong, said investors are significantly repositioning ahead of the Fed meeting.

• Wong added that Chair Powell offered hawkish guidance earlier this month on the outlook for rate cuts, prompting traders in US Treasury markets to adjust their positions accordingly.

SPDR Fund

Holdings in the SPDR Gold Trust — the world’s largest gold-backed ETF — fell by 1.44 metric tons on Monday, marking a second straight daily decline and bringing total holdings to 1,049.11 metric tons.

The euro rose in European trading on Tuesday against a basket of global currencies, resuming gains after a three-day pause against the US dollar as part of profit-taking from last week’s seven-week highs. The move back into positive territory reflects renewed investment demand for the single currency, supported by expectations that the interest-rate gap between Europe and the US is set to narrow.

The Federal Reserve is expected on Wednesday to deliver a third rate cut this year, while improving economic activity in Europe is paving the way for a more hawkish stance from the European Central Bank in upcoming meetings.

Price Overview

• EUR/USD rose 0.1% to $1.1650 from an opening price of $1.1637, after touching an intraday low of $1.1632.

• The euro ended Monday down 0.15% in a third straight daily loss as profit-taking continued from last week’s seven-week high of $1.1682.

US Dollar

The dollar index fell 0.1% on Tuesday, resuming the decline that briefly paused yesterday, reflecting renewed weakness in the US currency against major and minor peers.

The final Fed meeting of the year begins later today, with decisions due Wednesday. Markets continue to price in a 25-basis-point rate cut — the third consecutive cut this year.

European Interest Rates

• Last week’s data showed an unexpected rise in headline eurozone inflation for November, highlighting persistent price pressures facing the ECB.

• After the inflation release, market pricing for a 25-bp ECB rate cut in December dropped from 25% to 5%.

• Reuters reported that the ECB is likely to leave rates unchanged at the December meeting.

• Investors await further eurozone data before the 17–18 December meeting to reassess expectations.

Interest-Rate Gap

The current rate gap between Europe and the US stands at 185 basis points in favor of the US. Markets expect it to narrow to around 160 basis points this week following the Fed decision.

A narrowing of the transatlantic rate gap to its smallest range since May 2022 would provide additional support for EUR/USD.