The Euro continues its upward momentum this week, gaining strength against a weakening US dollar and reaching levels not seen in over four months. The single currency has exhibited positive performance against various counterparts as market expectations for elevated rate cuts are scaled back. Meanwhile, the US dollar remains on a downward trajectory, with the US dollar index revisiting levels last observed at the end of July. US Treasury yields are also hovering around multi-month lows as traders anticipate a series of rate cuts in the United States next year. According to the latest CME predictions, the Federal Reserve is anticipated to implement 25 basis points rate cuts at seven Federal Open Market Committee (FOMC) meetings in the coming year.

Later today, the market will closely watch the release of November’s US core Personal Consumption Expenditures (PCE) data, marking the final significant data event before the holiday break. Core PCE year-on-year is projected to decrease from 3.5% to 3.3%. Should the reading fall below expectations, it could lead to further depreciation of the US dollar.