USD was flat and mixed against other major currencies in the European session on Tuesday amid thin trading activity as financial markets in many countries remained closed for the Christmas holidays.
The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, traded at 101.70, unchanged from the previous close.
The US currency continued to be under pressure as indications of moderation in price pressures in the world's largest economy bolstered expectations that monetary policy easing would begin next year.
Last week's report on personal income and spending in the U.S. showed the Fed's favoured inflation gauge - the core PCE index - fell to its lowest level in over two years in November. Additionally, the University of Michigan's survey of US consumers found a decrease in inflation expectations. These data were seen by markets as welcome signs for the US rate-setters, solidifying bets for an aggressive interest rate reduction from the US central bank next year.
Markets now expect the Fed to decrease its interest rates by at least 150 basis points in 2024, with the first 25-basis-point cut predicted in March, according to the CME FedWatch Tool.