The market is shifting towards a hawkish stance, favoring the US dollar and potentially impacting other currency pairs. Important central bank meetings this week could provide further direction.

Divergent paths for major currencies as inflation trends differ. Canadian Dollar weakens on persistent inflation, Australian Dollar slumps on weak China data, British Pound rises on surprise inflation hike. Central banks face cautious stances as they navigate inflation and economic slowdown concerns.

Investors were initially optimistic about the euro due to slowing US inflation and expectations of the Federal Reserve cutting rates. However, the European Central Bank has been more cautious about easing monetary policy, and the German economy has weakened. This has put pressure on the euro, despite strong US stock indices.

Market participants are still analyzing last week’s US inflation data and the December jobs report, while economists predict the Fed will start cutting interest rates in March. Three cuts of 0.25% each are expected this year.

Dovish Fed pivot and easing inflation in major economies could weaken USD and strengthen other currencies. Geopolitical tensions in the Middle East add uncertainty and volatility.

For December 28, 2023: Major pairs exhibit mixed movements with potential for both bullish and bearish scenarios.

The euro is on a tear, bolstered by dovish Fed signals and a risk-on mood, while the Swiss franc maintains its strength after a year of intervention. Both currencies face potential clashes between market expectations and central bank stances in the coming year.

Here are the hottest markets to watch in December 26-27, 2023.

Holiday cheer? More like trading fear! December’s thin markets & wild swings test even the bravest. Opportunities abound, but tread lightly. Choose rest or risk, just manage it well. Festive spirit, wise decisions, happy trades! Wishing you a season of peace, good health, and continued success in the New Year. Thank you for being a part of our journey. Merry Christmas!

With 2023 drawing to a close, holiday cheer isn’t the only thing filling the air for Forex traders. The Western holiday season, centered around Christmas and New Year, can significantly impact market schedules and behavior. While December and January offer exciting trading opportunities, navigating low liquidity and volatility periods is crucial.