US Dollar Trades Lower Amid Mixed Fed Signals. Forecast as of 24.11.2025
In December, three dissenting voices may appear in the FOMC, regardless of the Fed’s decision on interest rates. Despite the dominance of hawks, doves are exerting pressure with their power. Let’s discuss this topic and make a trading plan for the EUR/USD pair.
The article covers the following subjects:
Major Takeaways
- FOMC doves are not going to surrender.
- In December, the Fed will likely define its policy for 2026.
- The eurozone economy remains stable.
- Long trades on the EUR/USD pair can be opened on a breakout of 1.1535.
Weekly US Dollar Fundamental Forecast
Although it is unclear whether Donald Trump will reach his goal of reducing the federal funds rate to 1%, he has already taken the first step. The FOMC has never been as divided as it is now. As soon as New York Fed President John Williams suggested that rates could fall in the near future, the futures market increased the likelihood of a rate cut in December from 28% to 67%, allowing EUR/USD bulls to push the pair higher.
As soon as investors believed that a lack of data would force the Fed to pause its cycle of monetary expansion, doves stepped forward. The December FOMC meeting will surely set the stage for developments in 2026. By the end of the year, Jerome Powell may have at least three dissenters, regardless of the Fed’s decision.
Total Number of Dissenting FOMC Members
Source: Wall Street Journal.
The total number of dissenters could set a record next year, which favors Donald Trump. By gradually appointing his supporters to the FOMC, the US leader could achieve a dove majority and ultimately engineer an aggressive rate cut. This would be extremely bad news for the US dollar.
However, Fed hawks are still strong. Boston Fed President Susan Collins believes there is no urgency to ease monetary policy. Financial conditions are creating a tailwind for inflation and GDP. In fact, experts from the Wall Street Journal believe that the US economy will grow by 3% in the third quarter.
However, dovish views are backed by authorities such as Christopher Waller, John Williams, and Jerome Powell himself. They advocate for preventive support of the labor market and consider the surge in inflation due to tariffs to be temporary. Finally, Stephen Miran will continue to influence the FOMC with his stance.
Euro-Area PMIs
Source: Bloomberg.
Thus, the transition of the futures market from complete confidence in a pause to a rate cut in December slowed EUR/USD bulls. Moreover, statistics on European business activity provided support for the euro.
According to Hamburg Commercial Bank, thanks to the services sector, the currency bloc’s economy should grow faster in the fourth quarter than in the third. Increased investment in infrastructure and the defense industry will accelerate EU GDP growth in 2026.
Weekly EURUSD Trading Plan
If a Fed rate cut in December is in sight, it will be challenging for the US dollar to correct against the euro. The potential for a pullback in EUR/USD is limited, and buying on the dip with a target of 1.149 was a sound strategy. Long positions can be increased on a breakout of 1.1535.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of EURUSD in real time mode
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