US Dollar Index (DXY) pares earlier advances, slips under 98.30 amid quiet holiday session
US Dollar Index Holds Slight Gains Amid Quiet Year-End Trading
During a subdued final trading session of the year, the US Dollar Index (DXY) is maintaining a modest increase on Wednesday. After reaching a session high of 98.44, the index has surrendered most of those gains and is now hovering around 98.25 as US markets prepare to open.
The DXY, which tracks the dollar’s performance against six major global currencies, currently sits about 2% below its November high of 100.40. This positions the index for an annual decline of nearly 10%, marking its poorest showing in eight years.
US Dollar Among the Weakest G8 Currencies in 2025
Throughout the year, investor sentiment has been dampened by uncertainty over President Donald Trump’s unpredictable trade strategies and mounting evidence of a slowing US economy. These factors have led to an increase in short positions against the dollar. Additionally, extraordinary political pressure on the Federal Reserve to lower interest rates has undermined confidence in the central bank’s autonomy, raising doubts about the dollar’s role as the world’s primary reserve currency.
Currently, the Federal Reserve is midway through a cycle of monetary easing, while most other major central banks have already reached their peak rates. This divergence has created significant resistance to any meaningful dollar rebound and is expected to keep the currency under strain into 2026.
As the year draws to a close, trading activity remains subdued. However, the upcoming US weekly Jobless Claims report could inject some volatility into the foreign exchange market. Forecasts suggest that new unemployment claims will rise to 220,000 for the week ending December 16, up from 214,000 the previous week. The outlook for the dollar remains tilted to the downside.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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