FX.co ★ DXY Eases from 1-Month High

On Wednesday, the US Dollar Index hovered close to the 99 mark, slightly retreating from the peak it reached earlier in the session. This movement reflects ongoing scrutiny by markets of potential rate reductions that the Federal Reserve might implement this year. Both the headline and core producer prices in November aligned with expectations, which is consistent with the recent moderate Consumer Price Index report. These outcomes have reinforced the market's perception that the Fed has the leeway to implement multiple interest rate cuts this year, focusing on an economy with a stalling labor market. However, some Federal Open Market Committee members continue to express concerns about persistent inflation. Concurrently, the dollar found support against a declining yen after Prime Minister Takaichi announced plans to hold a snap election. This move is anticipated to bolster her mandate and prolong the fiscal policies she has been advocating.