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US Dollar Slides to Multi-Month Lows as Fed Cut Bets Intensify | 24th December 2025

Dollar Slides on Fed Bets Global markets traded with a risk-supportive tone as the US Dollar extended its decline, hitting fresh multi-month lows amid growing expectations for Federal Reserve rate cuts. The softer greenback provided tailwinds for major FX pairs, with EUR/USD holding near the 1.1800 handle and NZD/USD consolidating close to its strongest levels since October. Meanwhile, USD/CAD slid to five-month lows as declining US yields and firmer oil prices combined to pressure the pair. In commodities, WTI edged higher toward $58.50 as geopolitical tensions continued to support energy markets. US Dollar Index Forecast (DXY) Current Price and Context The US Dollar Index has slipped to fresh lows near 97.80, marking its weakest level since October as markets continue to price in a more aggressive Federal Reserve easing cycle. Declining US yields and subdued inflation expectations are keeping the Dollar under sustained pressure. Key Drivers Geopolitical Risks: Risk sentiment remains relatively constructive, reducing defensive demand for the Dollar. US Economic Data: Recent data has reinforced expectations of slowing momentum. FOMC Outcome: Growing confidence in multiple Fed rate cuts is weighing heavily on the USD. Trade Policy: No immediate trade developments are influencing Dollar demand. Monetary Policy: A clearly dovish Fed outlook is eroding yield support for the greenback. Technical Outlook Trend: Bearish with strong downside momentum. Resistance: 98.30, then 98.80. Support: 97.50 followed by 96.90. Forecast: The Dollar may remain under pressure unless incoming data surprises to the upside. Sentiment and Catalysts Market Sentiment: Bearish on the USD. Catalysts: US macro data and Fed communication. WTI Crude Oil Forecast Current Price and Context WTI crude is drifting higher toward the $58.50 area, supported by ongoing geopolitical tensions and a softer US Dollar. Price action suggests a steady recovery despite broader macro uncertainty. Key Drivers Geopolitical Risks: Heightened tensions continue to add a risk premium to oil prices. US Economic Data: Slower growth expectations are offset by supportive monetary conditions. FOMC Outcome: Fed easing expectations support commodity demand. Trade Policy: No new trade-related catalysts impacting oil markets. Monetary Policy: Easier financial conditions underpin energy prices. Technical Outlook Trend: Gradually recovering within a broader range. Resistance: $59.20, then $60.50. Support: $57.40 followed by $56.00. Forecast: Further upside is possible if geopolitical risks persist. Sentiment and Catalysts Market Sentiment: Cautiously bullish. Catalysts: Geopolitical headlines and US inventory data. NZD/USD Forecast Current Price and Context NZD/USD is consolidating just below the mid-0.5800s, hovering near its highest level since October. The pair continues to benefit from broad US Dollar weakness and improving risk appetite. Key Drivers Geopolitical Risks: Stable risk sentiment supports higher-beta currencies like NZD. US Economic Data: Weak USD dynamics remain the dominant driver. FOMC Outcome: Fed easing expectations favor upside in NZD/USD. Trade Policy: No fresh trade developments impacting the Kiwi. Monetary Policy: RBNZ-Fed policy divergence limits downside risks. Technical Outlook Trend: Bullish but consolidating. Resistance: 0.5850, then 0.5900. Support: 0.5750 followed by 0.5700. Forecast: A sustained break higher may require further USD weakness. Sentiment and Catalysts Market Sentiment: Constructive. Catalysts: US data releases and global risk sentiment. EUR/USD Forecast Current Price and Context EUR/USD is holding near the 1.1800 level after pulling back slightly from three-month highs. The pair remains well-supported by broad Dollar softness and stable Eurozone fundamentals. Key Drivers Geopolitical Risks: Limited direct impact on the Euro currently. US Economic Data: Weakening US outlook supports EUR/USD upside. FOMC Outcome: Fed cut bets continue to pressure the Dollar. Trade Policy: Stable EU trade backdrop offers support. Monetary Policy: ECB’s restrictive stance contrasts with a dovish Fed. Technical Outlook Trend: Bullish with near-term consolidation. Resistance: 1.1850, then 1.1920. Support: 1.1720 followed by 1.1650. Forecast: The pair may resume gains if USD weakness persists. Sentiment and Catalysts Market Sentiment: Bullish. Catalysts: US data surprises and ECB commentary. USD/CAD Forecast Current Price and Context USD/CAD has fallen to five-month lows below 1.3700 as the US Dollar weakens broadly and oil prices edge higher. The move reflects a widening divergence between Fed easing expectations and relatively stable Canadian fundamentals. Key Drivers Geopolitical Risks: Energy-related tensions support the Canadian Dollar via oil prices. US Economic Data: Softer US data continues to weigh on the USD. FOMC Outcome: Fed easing expectations drive downside pressure. Trade Policy: No immediate trade developments affecting the pair. Monetary Policy: BoC’s steady stance contrasts with Fed dovishness. Technical Outlook Trend: Bearish. Resistance: 1.3760, then 1.3820. Support: 1.3650 followed by 1.3580. Forecast: Further losses are possible if oil prices remain firm. Sentiment and Catalysts Market Sentiment: CAD-positive. Catalysts: Oil price action and Fed-related headlines. Wrap-up With Fed easing expectations firmly priced in, the US Dollar may remain vulnerable in the near term unless incoming data challenges the current narrative. Currency markets are likely to stay selective, favoring higher-beta and commodity-linked currencies, while energy prices remain sensitive to geopolitical developments. As liquidity thins into the holiday period, traders may remain cautious, as even modest data surprises or headlines could trigger outsized moves across FX and commodities. Ready to trade global markets with confidence? Join Moneta Markets today and unlock 1000+ instruments, ultra-fast execution, ECN spreads from 0.0 pips, and more! Start now with Moneta Markets!

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Publication date:

2025-12-24 08:54:33 (GMT)

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