U.S. Dollar Outlook Q4 2025: Fed Cuts Loom, But Dollar Holds Firm

Categories:

ProviderNews

Platforms

Tags:

ACY Securities - Japer Osita

Sep 26, 2025

Markets expect two more Fed cuts (October & December), but inflation and jobs data remain decisive.
Resilient U.S. growth and hawkish Fed caution prevent a sharp dollar decline.
DXY rallies toward 98.834, signaling safe-haven demand is keeping the dollar supported.

The U.S. dollar has entered the final quarter of 2025 with remarkable resilience. Despite the Federal Reserve kicking off its easing cycle with a 25 bps cut in September, the greenback hasn’t lost ground - in fact, the U.S. Dollar Index (DXY) has pushed higher toward the 98.834 mark. This move highlights the market’s interpretation of the Fed’s stance: while policy is shifting toward lower rates, Powell’s hawkish guardrails, sticky inflation risks, and safe-haven flows continue to anchor the dollar.

Fed Cut in September Sets the Tone

The Federal Reserve’s 25 bps cut in September marked the start of its long-awaited easing cycle, taking rates to 4.00–4.25%. While dovish in action, Powell’s remarks were anything but: he emphasized inflation risks, described policy as still “modestly restrictive,” and committed to a data-dependent path.

This balance shows the Fed is easing - but with guardrails. Instead of a rapid pivot, the central bank is signaling gradualism, reinforcing that the U.S. dollar won’t collapse even as rates edge lower.

Markets Price Two More Cuts This Year

CME FedWatch probabilities highlight strong expectations for additional easing:

October 29, 2025: 87.7% chance of another 25 bps cut (to 3.75–4.00%).

December 10, 2025: 62% chance of another cut to 3.50–3.75%.

By year-end, markets broadly see the Fed trimming rates by a full 75 bps. But this outlook is not locked in.

If inflation stays sticky, the Fed could pause after October.
If jobs data weakens sharply, December could even bring a deeper cut.

In short: inflation and employment will dictate whether easing unfolds as priced or slows down.

Macro Drivers Supporting the Dollar

1. Resilient U.S. Data – GDP revisions and firm business activity reduce urgency for rapid cuts.
2. Sticky Inflation – Services and wage pressures remain, keeping the Fed cautious.
3. Global Divergence – The ECB and BOJ remain constrained, leaving the USD as the relative safe haven.
4. Risk-Off Demand – Trade tensions and geopolitical risks keep capital rotating into the dollar.

These drivers explain why DXY has strengthened, even as cuts loom.

Technical Narrative: DXY Pushes Toward 98.834

On the H4 chart, DXY reclaimed and held above the 97.60–97.70 Fair Value Gap, a sign of institutional demand supporting the dollar.

On the daily timeframe, the rally from the 96.218 support base has carried the index toward the 98.834 resistance zone, where price is now consolidating.

This move reflects how traders have interpreted September’s cut: a dovish adjustment packaged with hawkish caution. The rally shows that even in an easing cycle, the dollar is holding firm - underpinned by strong fundamentals and safe-haven flows.

Conclusion

Heading into Q4, the dollar’s story is clear:

markets see more cuts ahead, but the Fed’s caution and U.S. resilience are preventing weakness from spiraling.

With DXY pressing against 98.834, the technicals confirm the narrative - the dollar remains well-supported, not collapsing, as investors hedge against uncertainty.

Start Practicing with Confidence - Risk-Free!

Trade forex, indices, gold, and more
Access ACY, MT4, MT5, & Copy Trading Platforms
Practice with zero risk

It’s time to go from theory to execution - risk-free.

Create an Account. Start Your Free Demo!

Check Out My Contents:

Strategies That You Can Use

Looking for step-by-step approaches you can plug straight into the charts? Start here:

Indicators / Tools for Trading

Sharpen your edge with proven tools and frameworks:

How To Trade News

News moves markets fast. Learn how to keep pace with SMC-based playbooks:

Learn How to Trade US Indices

From NASDAQ opens to DAX trends, here’s how to approach indices like a pro:

How to Start Trading Gold

Gold remains one of the most traded assets - - here’s how to approach it with confidence:

How to Trade Japanese Candlesticks

Candlesticks are the building blocks of price action. Master the most powerful ones:

How to Start Day Trading

Ready to go intraday? Here’s how to build consistency step by step:

Learn how to navigate yourself in times of turmoil

Markets swing between calm and chaos. Learn to read risk-on vs risk-off like a pro:

Want to learn how to trade like the Smart Money?

Step inside the playbook of institutional traders with SMC concepts explained:

Master the World’s Most Popular Forex Pairs

Forex pairs aren’t created equal - - some are stable, some are volatile, others tied to commodities or sessions.

Stop Hunting 101

If you’ve ever been stopped out right before the market reverses - - this is why:

Trading Psychology

Mindset is the deciding factor between growth and blowups. Explore these essentials:

Risk Management

The real edge in trading isn’t strategy - it’s how you protect your capital:

Suggested Learning Path

If you’re not sure where to start, follow this roadmap:

1. Start with Trading Psychology → Build the mindset first.
2. Move into Risk Management → Learn how to protect capital.
3. Explore Strategies & Tools → Candlesticks, Fibonacci, MAs, Indicators.
4. Apply to Assets → Gold, Indices, Forex sessions.
5. Advance to Smart Money Concepts (SMC) → Learn how institutions trade.
6. Specialize → Stop Hunts, News Trading, Turmoil Navigation.

This way, you’ll grow from foundation → application → mastery, instead of jumping around randomly.

Follow me for more daily market insights!

Jasper Osita - LinkedIn - FXStreet - YouTube

This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplies by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.

Comments

Sort By:

Latest

Loading Comments

Please Sign In or Create Your FREE Account to Comment.

LiquidityFinder

LiquidityFinder was created to take the friction out of the process of sourcing Business to Business (B2B) liquidity; to become the central reference point for liquidity in OTC electronic markets, and the means to access them. Our mission is to provide streamlined modern solutions and share valuable insight and knowledge that benefit our users.

If you would like to contribute to our website or wish to contact us, please click here or you can email us directly at press@liquidityfinder.com.