USD depreciated against its global peers in the European session on Thursday on lingering expectations of aggressive interest-rate reduction from the Federal Reserve next year.
The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, traded at 100.74, down 0.25% from the previous close and near its five-month lows.
Markets have solidified their bets on the Fed rate decreases as recent data confirmed easing inflation, moderating economic growth, and slightly cooling labour market conditions.
Markets are now pricing in at least 150 basis points of rate cuts by the U.S. central bank in 2024, with the first cut expected in March, according to the CME FedWatch tool.
However, some market players and Fed policymakers warn that markets are too optimistic about the number of interest rate cuts anticipated in the U.S. in 2024.
Later in the day, investors will receive weekly jobless claims data, which might provide more clarity on the outlook for the US economy and interest rates.