While acknowledging that November and December are seasonally soft months for the dollar, our view is that this Dollar sell-off has come a little early.

We are bearish on the Dollar through 2024 but expect the core driver to be a bullish steepening of the US Treasury curve – which has not happened yet. Indeed, US two-year Treasury yields remain firm near 5%. We thus urge caution in chasing this Dollar decline much further.

Until we get some clear dovish communication from the Fed or US data is materially weak enough, we think this Dollar drop might have come far enough for the time being and suspect that the 103.00/103.50 support area could well hold the DXY this week.