The US dollar traded cautiously after a week of mixed economic signals, renewed concerns about Federal Reserve independence and targeted FX moves abroad. Weak job openings, resilient services activity, and upcoming nonfarm payrolls left the Dollar Index rangebound, while calls for RMB appreciation and RBI intervention in the rupee added external pressure. These tangible events suggest continued dollar vulnerability despite episodic safe-haven flows.

This article reviews last-week developments that materially affected the USD exchange rate: South Africa’s rand surge, China’s CFETS basket reweighting and stronger RMB fix, Indian rupee weakness, and Iran’s rial collapse. It explains how each event influences USD pairs and trading considerations for Q1.

A decisive dollar pullback this week was driven by growing odds of 2026 Fed rate cuts, US liquidity injections and decisive FX actions by South Korea and India. Currency-specific interventions—Korea’s hedging and tax measures, and the RBI’s $10bn swap—along with commodity and yield dynamics lifted peers like the CAD and pressured the USD index.

A concise recap of the last week: a softer U.S. jobs backdrop and a dovish Fed tone — including a 25bp cut and $40bn T‑bill purchases — pushed the dollar lower. Major currencies and some Asian FX responded, while Fed rhetoric remains mixed, keeping volatility elevated for traders.

The U.S. dollar weakened following the Federal Reserve's 25-basis-point cut on Dec. 10, 2025. The DXY slipped near 99 as markets recalibrated expectations for future easing. Major pairs — the euro, yen, Canadian dollar and several emerging-market currencies — reacted to the Fed's dovish tilt, shifting flows and central-bank divergences across Asia and Europe.

The U.S. dollar weakened sharply last week as markets ramped up expectations of imminent Federal Reserve rate cuts. Stronger euro, pound, Canadian and New Zealand dollars, plus a record-weak Indian rupee, illustrate how divergent data and rate paths are reshaping FX flows.