The U.S. dollar, as measured by the DXY index, extended its retracement on Thursday, sinking below that 102.00 mark and reaching its lowest level since early August. This selloff was the result of the collapse in U.S. Treasury yields, triggered by the Fed’s dovish posture at its December meeting, which seems to have caught investors, who were expecting a different outcome, completely off guard.
To provide background information, the FOMC announced yesterday its last monetary policy decision of the year. Although the institution kept borrowing costs unchanged at a 22-year high, it gave the first signs of an impending strategy shift, with Powell reinforcing the idea of a pivot by admitting that talk of rate cuts has begun.
