NEW YORK: The dollar fell on Wednesday before the Federal Reserve is expected to cut rates by 25 basis points, while traders were also seen as closing out profitable bets on a Donald Trump presidency after his election victory on Tuesday.

Republicans also won the Senate majority, putting the party on track for a clean sweep that would allow it to make larger legislative changes. They are leading the race to win the House of Representatives, though this has yet to be decided.

Investors will focus on whether Fed Chair Jerome Powell makes any reference to the election swaying Fed policy in coming months at the conclusion of the US central bank’s two-day meeting later on Thursday. Any comments on recent jobs reports will also be a focus.

A much stronger than expected jobs report for September was followed by surprisingly weak data for October, though analysts said that jobs gains last month were hurt by hurricanes and labor strikes. Powell may be likely to keep his options open however, and reiterate that the US central bank remains data dependent given the uncertainty over how a Trump administration will play out.

“The Fed will probably try to keep a fairly open-minded message and avoid any particularly strong commitments,” said Vassili Serebriakov, an FX strategist at UBS in New York. Trump is expected to clamp down on illegal immigration, enact new trade tariffs, maintain or introduce new tax cuts and loosen business regulations, which analysts see as boosting growth and inflation.

That would send Treasury yields and the dollar higher and has also fueled speculation the Fed might reduce rates at a slower and shallower pace. Traders are now pricing 67% odds the Fed will also cut in December, down from 77% on Tuesday, according to the CME Group’s Fed Watch Tool. The dollar index hit a four-month high of 105.44 on Wednesday as investors priced in Trump policies. It dipped to 104.33 on Thursday, down 0.74% on the day, as investors closed out some election bets. “In the three weeks prior to the election there was a lot of dollar buying and positioning was already quite long the dollar, so I think today’s reversal is probably explained by some of these red sweep trades that were put on before the election maybe being partially squared,” said Serebriakov.

Serebriakov added that further large gains in the US currency may be unlikely before the impact of new policies including tariffs is felt over the coming two years. Sterling rose after the Bank of England cut interest rates by 25 basis points but said it expected UK inflation and growth to pick up more quickly than it had previously anticipated. It was last up 0.86% at $1.2989.

The euro rose 0.76% to $1.0809. The single European currency shrugged off political crisis in Germany, where the already awkward coalition led by Chancellor Olaf Scholz collapsed late on Wednesday. The greenback fell 0.89% to 153.25 yen. The Japanese currency is likely to be hurt by a wide interest rate differential with the United States following Trump’s victory.