USD Summary: The U.S. dollar, measured by the DXY index, took a significant hit, dropping almost 0.9% on Wednesday. This was prompted by a sharp decline in U.S. Treasury rates after the Federal Reserve surprised with a dovish stance in its guidance. The central bank hinted at an upcoming strategy shift by adopting a more lenient stance on inflation and acknowledging discussions about rate cuts. The Fed’s economic projections hinted at a potential policy shift in 2024, aligning more closely with Wall Street’s expectations, signaling a bearish outlook for the greenback and yields.

GBP Summary: UK GDP data for October disappointed as the economy contracted by 0.3%, ending a period of resilience. Market sentiment leans toward expecting rate cuts in 2024, with softer wage growth and persistent inflation in the services sector contributing to this view. Although the Bank of England (BoE) is anticipated to start rate cuts later than the European Central Bank (ECB), it is expected to adopt a more aggressive approach. The GBP faces selling pressure amid these challenges, with the BoE’s stance under scrutiny as it contrasts with the Federal Reserve’s predictions of rate cuts.

EUR Summary: The European Central Bank’s upcoming policy meeting is likely to maintain unchanged rates, but investors are keen on forward-looking statements, particularly regarding potential rate reductions. EUR/USD’s technical analysis suggests a bullish trend, supported by breaching the 1.0860 level. The pair aims to challenge the 1.0960 resistance, maintaining a bullish outlook. However, a break below 1.0860 could introduce short-term bearish pressures, and a trading range between 1.0850 support and 1.1000 resistance is anticipated for the day.