Anna 
The U.S. Dollar (USD) saw its second consecutive weekly drop, ending the week at its lowest level since late July (101.70). The Dollar Index (DXY) has experienced a decline of approximately 4.21% in the fourth quarter and around 1.75% in December. These losses have been attributed to a significant pullback in government bond yields, correcting sharply lower from their cycle highs established in late October.
The dovish stance adopted by the Federal Reserve (Fed) has further contributed to the Dollar’s retreat, reinforcing the downward shift in the Treasury curve. The FOMC, in its recent meeting, acknowledged discussions of rate cuts and signaled a potential 75 basis points of easing in 2024.
Looking ahead to the last week of 2023, there are no impactful releases expected that might alter the current trends significantly. The absence of high-impact events doesn’t guarantee low volatility, especially with reduced liquidity conditions typical of the holiday period. Traders are advised to exercise caution as low volumes during this period can amplify price swings.
