US Dollar Index roils after Fed delivers expected interest rate moves

• Fed trims interest rates 25 basis points, as expected.
• Further QE drawdown has been confirmed, which was also anticipated.

The US Dollar Index (DXY) churned after the Federal Reserve (Fed) delivered a widely-anticipated 25 basis point interest rate cut on Wednesday. The Federal Open Market Committee (FOMC) met investor expectations, but a notable lack of juicy headline-generating comments prevented market flows from spiraling out of control.

The Greenback caught a bit of a tailwind after the Fed acknowledged it would continue to ease back on Quantitative Easing (QE) practices, with the process of drawing down the Fed's mortgage-backed asset balance sheet into long-term Treasuries by December 1.

Two down, one to go

This marks the second straight interest rate cut from the Fed, albeit with some policymakers making a mental note of a general increase in some inflationary pressures through the second half of the year, but not enough to deter another leg down in interest rates.

With a second interest rate cut confirmed and in the books, investors will immediately be pivoting into 'rate cut watch' mode once again, looking for a third consecutive rate trim when the FOMC gathers for another interest rate deliberation announcement on December 10.

DXY 5-minute chart