The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, has lost its daily gains and is trading around 97.00 during the European hours on Thursday. Traders will likely observe weekly US Initial Jobless Claims later in the North American session.

However, the US Dollar (USD) gained support from strong inflation projections that have curbed expectations of more aggressive Federal Open Market Committee (FOMC) rate cuts. The Federal Reserve (Fed) lowered the funds rate by 25 basis points (bps), marking the first cut of the year. A Summary of Economic Projections (SEP), or ‘dot-plot,' signaled a further 50 bps of easing before year-end, slightly above its June projections.

Fed Chair Jerome Powell adopted a cautious tone, describing the rate cut move as "risk management" amid labor market weakness, while emphasizing there is no urgency to accelerate easing. The newly appointed Governor Stephen Miran favored a larger 50 bps cut, leaving the committee less divided than expected.

Reuters cited Larry Hatheway, global investment strategist at the Franklin Templeton Institute, saying that markets are likely to be somewhat disappointed by the Fed's lack of clarity and direction, as it stopped short of endorsing expectations for a clear series of rate cuts. Hatheway added, "We've had a rather cautious, not necessarily fully defensive view here for a while," which was "reinforced" by the Fed's message.

Source: Fxstreet