#FedRateCutAffectsDollarTrend The trend of the U.S. dollar in the market is influenced by several key factors: 1. Interest Rates & Federal Reserve Policy Higher interest rates attract foreign investments, increasing demand for the dollar. Lower interest rates make the dollar less attractive, leading to depreciation. 2. Inflation & Economic Data High inflation weakens the dollar’s purchasing power but can also lead to rate hikes, strengthening the currency. Strong GDP growth, low unemployment, and high consumer confidence typically boost the dollar. 3. Global Risk Sentiment In times of economic uncertainty (e.g., recessions, geopolitical tensions), investors flock to the dollar as a safe-haven currency, increasing its value. When markets are stable, investors may shift to higher-yield assets, weakening the dollar. 4. Trade Balance & Current Account Deficit A trade deficit (importing more than exporting) puts pressure on the dollar since more foreign currency is needed. A trade surplus strengthens the dollar as foreign buyers need U.S. dollars to purchase American goods.