The Dollar is back down, heavily, by -0.4 to -0.5% against the main currency pairs: the $-Index is down to 101.90, its lowest mark since the period July 31 to August 4.

The structure continues to draw a perfect symmetry (double-headed/double-shouldered bearish) and is coming back to rest on a major medium-term support derived from 2 previous major lows registered at 89.90 and 99.9 (mid-May 2021 and early July 2023).

Breaking this oblique would change many things in the world of finance, as a weaker dollar would give the US a competitive edge, but with a downside: the risk of the US suffering a wave of imported inflation.
The Dollar-Index could quickly lose a further 2% to test a major psychological threshold, the '100'.It has already lost 11% since the end of September 2022.
The medium-term target would be around 94, another long-term support this time (which comes from a low of 73.5 established at the end of March 2011).
Symmetrically, the euro would break 1.10 and retest its summer high of 1.1250 of July 14.

Forex traders are betting that the FED will keep the initiative when it comes to easing rates, but we can't rule out the scenario of the ECB becoming more proactive: with Europe already posting zero growth (compared with 5% in the US), the ECB can't do less than the FED to prevent the recession extending well into 2024.
And if US growth is slow to move away from 5%... what need would there be for the FED to cut rates drastically: the euphoria reigning on Wall Street is proving 'communicative' (supporting consumption) and this may thwart the convergence of the inflation rate towards 2% in 2024.

The greenback seems to have suffered from the downward revision of third-quarter US GDP growth from +5.2% to 4.9% (final estimate).

Not to mention the announcement of a further deterioration in the Philly Fed index, which came in at -10.5 this month versus -5.9 in November, whereas economists were expecting it to be around -3.

The sub-index measuring the evolution of new orders received by companies moved back into the red zone, at -25.6 versus +1.3 last month, as did the employment component, down from +0.8 to -1.7 month-on-month.

On the other hand, the indicator covering prices paid rose to +25.1, compared with +14.8 in November.

Also of note was a -0.5% decline in the index of indicators in November (after -1% in October): the Conference Board, which calculates these figures, anticipates a recession in early 2024.

Weekly jobless claims recovered at the margin (+2,000 to 205,000) at the end of the week to December 11, a figure 2,000 higher than the previous week's revised figure (203.000, compared with 202,000 initially announced).

The four-week moving average - more representative of the underlying trend - came out at 212,000 last week, down by 1,500 on the previous week's revised average.

The highlight on the forex market will coincide tomorrow with the household income and expenditure figures, which will include the 'PCE' price index, closely watched by the Federal Reserve.


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