US dollar declining as markets digest Fed’s stance

The US dollar has experienced uneven trading activity due to remarks by Mester and Austan Goolsbee. The US Dollar Index increased on Friday, but not enough to alter market perception.

Hedge funds and banks are urging a goldilocks scenario as a way for the markets to oppose the Federal Reserve’s attempts to regulate inflation and interest rates. As the week draws to a close, significant releases are scheduled before the markets close for the Christmas break.

The US Gross Domestic Product (GDP) final estimate for the third quarter could influence markets on Thursday before Friday. The Personal Consumption Expenditure (PCE) Price Index and Durable Goods data for November will be revealed on the final day before Christmas.

The market’s response to the Fed’s rate decision last week suggests that the markets are getting ahead of themselves. Rate cuts are not on the table, as stated by two ECB members.

A soft landing scenario in the US may be imminent due to the measures taken to maintain the economy and contain inflation. The DXY US Dollar Index may be headed towards 100.00 in the near future, as traders have experienced many rejections against the 55-week Simple Moving Average (SMA) around 104.00.