The US Dollar (USD) is trending upward on Friday as investors digest the Federal Reserve’s recent decision to reduce its policy rate by 25 basis points to a 4.50%-4.75% range. The rate cut has faded to the background as attention turns to Fed Chairman Jerome Powell’s remarks on Fed independence. Responding to questions on his job security under President-elect Donald Trump, Powell made it clear he would not resign and emphasized the Fed’s independence from political influence.

Friday’s economic calendar features the preliminary November release of the University of Michigan Consumer Sentiment Index, a leading indicator of consumer confidence. This report will be closely watched, particularly its inflation expectations component, as inflation management remains a priority for the incoming administration.

Market Highlights: Dollar Momentum Continues Amid Transition Concerns

Following the Bank of England’s rate cut, the Federal Reserve matched the move, lowering rates by 25 basis points. In the post-meeting conference, Powell addressed questions about potential political pressure, firmly stating that the Fed operates based on data, not politics. His definitive response provided stability for markets wary of potential policy shifts.

At 15:00 GMT, the University of Michigan’s Consumer Sentiment Index will offer insights into consumer outlooks for November, with expectations of a slight uptick to 71. Inflation expectations remain uncertain, yet key to understanding consumer perspectives under the new administration. Additionally, at 16:00 GMT, Federal Reserve Governor Michelle Bowman is set to discuss banking at a University of Mississippi symposium.

Meanwhile, European stocks show losses of around 1% intraday, and US futures signal a cautious opening. The CME FedWatch Tool indicates a 71.3% probability of another 25 bps rate cut at the December 18 meeting, with a 28.7% chance for rates to stay unchanged.

Technical Outlook: US Dollar Index (DXY) Supported by Fed Stability

The DXY eased slightly on Thursday after strong gains earlier in the week. Powell’s confirmation of Fed stability reassured markets that future monetary policy will be directed toward economic balance, addressing inflation concerns without excessive intervention. Key levels on the upside include resistance at 105.53, with further caps at 105.89 and 106.52. Support is seen at the 104.00 level, with the 200-day SMA at 103.86 acting as a potential floor.