Dollar Softens Post-Fed Cut; AI Stocks Drag Markets

The EUR/USD pair rallied on Wednesday, touching an eight-week high around 1.1700 after the Federal Reserve delivered a widely expected 25-basis-point rate cut. The move, interpreted by markets as a “dovish hold,” triggered broad selling of the US Dollar and lifted the Euro across the board.

The Fed’s decision came with three dissenting votes, including Governor Stephen Miran, who pushed for a larger 50-basis-point reduction. Meanwhile, Regional Fed Presidents Jeffrey Schmid and Austan Goolsbee opted to maintain current rates.

Fed Chair Jerome Powell acknowledged this delicate balance, stressing that policy is now roughly neutral and that upcoming decisions will be shaped by economic data, which he noted may be “distorted” in the near term.

With no major data releases in the Eurozone, comments from European Central Bank officials helped support the currency’s upward momentum. ECB Governing Council member Gabriel Makhlouf expressed confidence that medium-term inflation will return to the 2% target, according to Bloomberg.

Lagarde noted that monetary policy is “in a good place,” hinting that the central bank may upgrade its forecasts in December—adding to the Euro’s tailwind.

Bitcoin retreated early on Thursday as markets digested the Federal Reserve’s latest interest rate cut, which was overshadowed by a cautious policy tone and visible divisions among U.S. central bankers. The uncertainty weighed on expectations for meaningful monetary easing next year.

A clearer commitment to sustained monetary loosening typically supports speculative assets such as cryptocurrencies by lowering borrowing costs and boosting overall liquidity. The Fed’s cautious stance, however, tempered those expectations.

Bitcoin’s decline also mirrored broader risk-off sentiment across financial markets, driven in part by renewed concerns over the profitability of artificial intelligence investments. Technology shares weakened after U.S. cloud-computing firm Oracle issued guidance that fell short of expectations and warned of increased capital spending on AI infrastructure—raising doubts about how quickly heavy investment in the sector will translate into earnings.

Altcoins traded broadly lower, with Cardano among the notable laggards, sliding more than 7% during the session.

Oil prices climbed on Wednesday after the U.S. seized a sanctioned oil tanker off Venezuela’s coast, stoking concerns over potential supply disruptions. The seizure, reportedly involving the tanker Skipper, comes amid heightened U.S. military presence in the Caribbean and growing loading risks in Venezuela. Analysts also noted that recent attacks by Ukrainian sea drones on Russian oil vessels provided additional support to crude markets.

Traders remain cautious as geopolitical tensions and ongoing Ukraine peace talks influence risk sentiment. Meanwhile, U.S. Energy Information Administration (EIA) data showed a decline in commercial crude inventories by 1.812 million barrels, exceeding forecasts and signaling slightly tighter supply. Gasoline and distillate stocks, including diesel and heating oil, rose modestly, reflecting seasonal shifts in consumption.

On the economic front, a divided U.S. Federal Reserve cut interest rates, potentially supporting oil demand by lowering borrowing costs. Market watchers say these combined geopolitical and economic factors are likely to keep oil prices supported into year-end.

U.S. equities closed higher on Wednesday following the Federal Reserve’s third rate cut of the year, though concerns over the central bank’s cautious outlook kept markets on edge.

The Federal Reserve lowered interest rates by 25 basis points to a range of 3.50%–3.75%, bringing the cumulative easing this year to three cuts. Fed Chair Jerome Powell said the current rate sits within the “range of plausible estimates of the neutral rate,” emphasizing that future policy moves will depend on incoming economic data.

President Donald Trump is set to begin the final round of interviews for the next Fed Chair, according to the Wall Street Journal. Candidates include former Fed Governor Kevin Warsh and White House economic adviser Kevin Hassett, widely viewed as the frontrunner to succeed Powell next year.

Oracle reported fiscal second-quarter results late Wednesday after the bell, sending shares down as much as 10% in after-hours trading. The company forecast weaker-than-expected earnings for the current quarter and significantly raised its capital expenditure outlook for fiscal 2026, fueling concerns over its ability to convert massive AI spending into revenue. Rising debt levels, after billions in bond issuance this year, added to investor caution.The broader tech and AI sector also felt the impact in aftermarket trading.