The U.S. dollar showed little movement on Tuesday as traders awaited the final Federal Reserve meeting of the year, while the Australian dollar strengthened after a more hawkish tone from the Reserve Bank of Australia.

At 04:00 ET (09:00 GMT), the Dollar Index — which tracks the greenback against a basket of six major currencies — dipped slightly to 99.042.

A possible “hawkish” rate cut?

The Federal Reserve begins its two-day policy meeting later today and is widely expected to deliver a 25-basis-point rate cut when it announces its decision on Wednesday.

Fed funds futures suggest nearly a 90% probability of a cut, according to CME’s FedWatch tool.

However, uncertainty persists over what the Fed will communicate regarding further easing in 2026, especially with the likely announcement of a new Fed Chair approaching.

“There are now high expectations of a ’hawkish cut’ at Wednesday evening’s FOMC decision,” said analysts at ING. “With market pricing of further Fed easing still vulnerable, we suspect the dollar’s downside is limited into the Fed meeting.”

The main U.S. data release due later today is the JOLTS job-openings report, though its October reference period means it is unlikely to sway the Fed’s current deliberations.

Euro lifts on better German export data

EUR/USD rose 0.1% to 1.1645 after German export figures for October surprised to the upside. Exports increased by 0.1% month-on-month, defying expectations for a 0.5% drop. The improvement was driven by demand from EU partners, while shipments to the U.S. and China declined sharply.

The data offers another sign that Germany’s economy may be stabilizing, which provides some support for the euro.

Still, ING warned that “failure to pass a social security budget in the French parliament today would be greeted negatively by markets and could re-insert some political risk back into the euro.”

GBP/USD added 0.2% to 1.3348, holding firm ahead of Friday’s UK GDP figures and next week’s Bank of England policy announcement.

Aussie dollar climbs after RBA holds rates

In Asia, AUD/USD rose 0.3% to 0.6638 after the Reserve Bank of Australia kept its cash rate unchanged at 3.60%, a move that had been broadly expected.

The RBA said inflation risks had “tilted to the upside” and cautioned that stronger-than-forecast domestic demand could intensify capacity pressures — prompting policymakers to take more time to assess the persistence of price increases.

This suggests the RBA’s July–August–May easing cycle is on pause for now, with the central bank reluctant to cut again while core inflation remains elevated.

Elsewhere, USD/CNY inched lower to 7.0702, while USD/JPY climbed 0.3% to 156.29 after a powerful 7.5-magnitude earthquake struck northeast Japan overnight, triggering evacuation orders and tsunami alerts that were later downgraded to advisories.

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