The U.S. dollar fell to its lowest level this year against the Japanese yen, dropping 1% amid renewed speculation about a potential 50 basis point rate cut by the Federal Reserve next week. Media reports from the Wall Street Journal and Financial Times reignited debates over the size of the cut, shifting market expectations from a typical 25 bps reduction to a possible 50 bps move. Traders now assign a 40% chance of the larger cut, following stronger-than-expected inflation data earlier in the week.

Meanwhile, the euro gained against the dollar after the European Central Bank cut rates by 25 bps but signaled that further cuts may not follow soon. The dollar also fell against the Swiss franc and remained little changed against the British pound. Investors are now looking toward the Bank of Japan’s rate decision, where rates are expected to stay steady, although gradual hikes could come in the future.