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Forex Today: US Dollar softens as Gold nears record high ahead of year-end trading

Here is what you need to know on Wednesday, December 24:

The US Dollar Index (DXY) struggles to find demand on Tuesday, even after strong United States (US) Gross Domestic Product (GDP) data. The DXY is now trading near the 98.00 price region after nearing three-month lows in the Asian trading hours.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Euro.

USDEURGBPJPYCADAUDNZDCHF
USD-0.23%-0.24%-0.48%-0.42%-0.60%-0.71%-0.44%
EUR0.23%-0.01%-0.26%-0.19%-0.37%-0.48%-0.22%
GBP0.24%0.01%-0.25%-0.18%-0.36%-0.47%-0.20%
JPY0.48%0.26%0.25%0.06%-0.09%-0.24%0.06%
CAD0.42%0.19%0.18%-0.06%-0.16%-0.29%-0.03%
AUD0.60%0.37%0.36%0.09%0.16%-0.11%0.15%
NZD0.71%0.48%0.47%0.24%0.29%0.11%0.27%
CHF0.44%0.22%0.20%-0.06%0.03%-0.15%-0.27%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Gold: Increasing geopolitical tensions continue to boost safe-haven demand, driving the yellow metal to its all-time high of $4,497. Additionally, ongoing expectations that the Federal Reserve (Fed) may lower interest rates further into 2026 are providing extra support for bullion, helping to keep prices near record levels.

AUD/USD: The pair trades near the 0.6670 level, trimming some of its gains after posting a four-month high on Tuesday, after the Reserve Bank of Australia’s Meeting Minutes showed policymakers discussing the risk that interest rates may need to rise if inflation remains persistent.

EUR/USD: Holds near 1.1780 after the US Bureau of Economic Analysis has released the preliminary estimate for third-quarter Gross Domestic Product (GDP), which was delayed due to the recent government shutdown. The report indicates that the US economy grew at an annualized rate of 4.3% in Q3, exceeding both the prior 3.8% and the market expectation of 3.3%.

GBP/USD: The GBP/USD pair trimmed part of its intraday gains on Tuesday as traders digest the mixed batch of US economic data.

USD/JPY: Trades around 156.30 on Tuesday, cutting down almost half of the losses in the late American session. The pair remains under pressure despite a US Dollar (USD) supported by a string of better-than-expected US data.

Fed FAQs

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.

Author

Agustin Wazne

Agustin Wazne joined FXStreet as a Junior News Editor, focusing on Commodities and covering Majors.

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