The holiday season is ongoing, and most of the market is closed. This includes the forex market as well, which would likely see a shift after it opens. As of now, the US dollar has fallen, and the Euro is up, the highest since August this year. The US Dollar Index paints a gloomy picture by reflecting 101.40 on the board. Coming as a relief is the potential downward trend of inflation.
The number is inching closer to the target of 2%, currently standing firm at 3.14%. It will set the tone for the rate cut. Analysts are tasked with identifying the optimal time. Only June appears probable, given the difficult negotiations in March.
The Holiday trade remains quiet post-Christmas. Other markets are closed for a single activity. The same could prevail until the New Year. USD and EUR are dancing around 0.9048, a slight hit for the Euro, which was at 0.9046 moments before drafting this article.
Holidays Shift Market Trading
Christmas, Boxing Day, and the New Year are being celebrated in Australia. Markets have closed at a time when one USD is being exchanged for 1.46 AUD. The pair has posted a modest loss of 0.6820 as the march toward 0.68 retains its pace. AUD and EUR are pairing at 1.6175, and the Japanese yen is on the list at 0.0103.
The UK celebrates the same public holidays with a last-seen rate of 0.79 for every US dollar. There has been a fall on the graph in the last 30 days; the slip has come to 0.68%. The UK Forex Broker is poised to enter the world of financial troubles if it keeps up with the prevailing inflation. The rate is around 3.9% in November, down from 4.6% in October. Experts are dubious about the recovery and investment prospects in 2024.
Conditions are pretty much the same in the US, which could grow slowly in the next year. Plus, the US Government Bond Yield is not precisely fetching investors the desired result. The rate was last seen at 3.89%, coming when prospects in other countries were brighter.
The Consumer Price Index in New Zealand is spreading the vibe of worry across the globe. The US dollar is impacted to some extent. NZ trails at 5.6% in the 12 months to the September 2023 quarter. The annual inflation is, nevertheless, expected to gain control by the end of the next year. Stats may point toward the milestone of 3%. Holiday Dollar will still be responsible for shedding the weight it has gained in the last couple of months.
Hong Kong is at ease with an inflation rate of 1.88% for 2022. It has, in the last 40 years, fallen only in the range of -4% and 11.2%. The average comes to 2.5% for the past 10 years until 2022. While it is above the Asia-Pacific regional average of 2.1%, Hong Kong has a lot to offer at the exchange rate of 7.81 for a US dollar.
Holiday Euro compares to that at 8.63, creating a vacuum for a larger influx of the US Dollar.
Holiday seasons have the cumulative effect of bringing the FX market to a standstill. Investors are prevented from carrying out any transaction. Additionally, it provides an optimal opportunity for investors to review geopolitical and macroeconomic data about the forthcoming year. The strengthening of the US Dollar, for instance, is contingent upon the Federal Reserve reducing the interest rate. That is improbable during the initial half-year.
Another way to better utilize the holiday season in the forex market is to explore diversification. Muted trading volumes will have less impact on the mind if they are diverted to analyzing other currency pairs. Better would be the action yielding higher results. A EUR USD holiday forex shift is inevitable, as is one for other currency pairs.
Understanding holiday trading volumes is the key to making a move when the global market opens. Moving forward, expect the US dollar to recover amid a fight between the Japanese yen and countries attempting to ditch the USD in their bilateral trades.