The USD Index fell to its lowest level since July as international investors believe the US Federal Reserve (Fed) will soon start a rate cut cycle next month.
The USD Strength Index (DXY) fell around 99.6 points in the trading session on November 30, down 1.2% from last week and marked the fourth consecutive week of decline, also the strongest downward trend in the past 4 months.
Investors in the international monetary market believe that signs of cooling inflation and slowing the US labor market have reinforced the possibility of the Fed cutting interest rates as early as December. According to CME's FedWatch tool, the probability of the Fed cutting 25 basis points in the next session has increased to nearly 70%.
The US dollar is in a clear correction phase after a nearly two-year streak of gains. The sharp decline in US government bond yields is making the greenback lose its appeal, said Westpac Bank currency expert Sean Callow.
In the market, the euro increased to 1.098 USD/EUR, the Japanese Yen traded at around 147.1 JPY/USD, while the British pound increased to 1.27 USD/GBP, reflecting the simultaneous weakening trend of the USD.
In addition to policy factors, analysts also note that demand for risky assets such as stocks and gold is rising, draining cash flow away from the USD - which is considered a safe haven asset during the tightening period.
According to Reuters, many traders believe that the USD could fall further if the Fed sends a clear signal of policy easing in the first quarter of 2026. However, some banks such as Goldman Sachs believe that the USD could recover technically in the short term if the upcoming US jobs data is released more strongly than expected.
