The dollar has been floundering this Tuesday, as the holidays significantly temper forex day trading volumes. Looking further ahead, however, US inflation appears to be lowering, which will maintain pressure on markets. This trend gives the Federal Reserve the impetus it needs to make rate cuts in the upcoming year.
Recent data from US markets indicate that prices have been falling over the course of November. This marks the first price drop in 3.5 years, with inflation finally falling below 3%.
This decline has improved the market’s mood, which is now expecting the first rate cut to come in March. Recent events have already affected the dollar and forex trading strategies. The Fed’s declaration of rate cut plans a week and a half ago propelled speculation about the timing of this decision. March, coinciding with a pivotal Fed meeting, seems like a likely time for such a major announcement.
Although the Fed has performed well, it has not quite reached the goals it originally intended to by the end of 2024. Inflation had stood at a 5% core value, and while it has not yet reached the 2% target, it is on its way there. The impact of this on forex day trading markets warrants close observation.
The yen has found a steady footing during this period. The Japanese currency has reached its highest relative value in 5 months. The Bank of Japan’s very loose monetary policy undoubtedly contributed to this. However, it is still too early to say if there will be any significant shifts in this policy.
Other central banks remain relatively aggressive with their rate hikes so that Japan might follow suit. The Bank of Japan’s governor seems confident that the bank will reach its inflation aims soon enough, though he offered no details on policy plans. Currently, the yen has reached 142.25 to the dollar on the best forex signals, aided by the governor’s comments.
