The USD is going through a period of strong depreciation globally. According to Reuters, the USD strength index (DXY) fell to around 99.6 points in the trading session on November 28, the lowest in more than 4 months and lost more than 1% in just one week.
This development comes as US bond yields fall and the market is betting heavily that the US Federal Reserve (Fed) will start a rate cut cycle. Data from CME FedWatch shows that the probability of the Fed cutting 0.25 percentage points in December has increased to 87%, compared to 39% a week ago, after a series of cooling signals from inflation and US economic growth.
On Investing.com, the DXY index decreased by about 2.4% in November, fluctuating in the 96.2110.1 point range over the past year and is currently approaching the bottom of the range. Bloomberg also noted that the US dollar has fallen against most major currencies, especially the euro and the Japanese Yen, as high-level US interest rate expectations have gradually lost their appeal.
According to Kitco News, the weakening of the USD is creating an advantage for gold and other safe-haven assets. Wells Fargo believes that falling interest rates, a weak US dollar and a stagnant cryptocurrency market have opened up a favorable environment for gold to enter a new price increase cycle.
In the bond market, the US 10-year yield fell to around 3.88%, its lowest since the beginning of August, continuing to put pressure on the greenback. However, analysts note that the USD could still recover if US economic data is better than expected or the Fed signals more caution in cutting interest rates.
However, in the short term, the US dollar is likely to continue to be under downward pressure as the Fed's policy easing expectations are becoming increasingly clear, thereby strengthening the upward trend of non-dollar assets such as gold and global stocks.
