US Dollar: Rate Cut Bets Unleash Greenback Bears - Can Bulls Reclaim 103 Level?
After keeping interest rates unchanged last week, the US Fed signaled its intention to begin reducing interest rates next year.
The US dollar index, declining in response to the Fed's statement, sustained its weakened stance by closing the week in the 102 bands, having dropped below the 102 level the previous week.
DXY, hitting its lowest point in the last 4 months last week, further intensified its decline as the European Central Bank and the Bank of England provided more hesitant signals regarding interest rate cuts.
While the current outlook suggests that the dollar may move sellers against major currencies until the end of the year, weak global growth may be a trigger for the dollar to find support at current levels in the first quarter of 2024.
However, in the current situation, while surveys show that the expectation for a rate cut in March has reached 80%, this expectation continues to keep the dollar under pressure.
On the other hand, Atlanta Fed President Bostic said that rate cuts could start in the 3rd quarter, provided that the bank inflation does not derail, in his opinion on the Fed's monetary policy. Bostic expects 2 quarterly rate cuts next year.
Chicago Fed President Austan Goolsbee argued in his latest statement that the focus should be on inflation employment as it moves towards its target.
According to this statement, Goolsbee was one of the Fed members who remained more optimistic that restrictive monetary policy could be abandoned earlier.
According to the current outlook, the weakening of the dollar can be expected to continue partially until the end of the year.
With the new year, we may see that the decline will not continue for a long time with some recovery based on the global outlook.
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