The US dollar's weakness may be short-lived, especially against the euro, yen, yuan, Aussie, and kiwi.

Market participants are increasingly focusing on speculation surrounding the prospect of a Fed interest rate cut. Consequently, the greenback weakened against almost all other major currencies. The US Dollar Index (DXY) was seen falling to the 103.50s range during Monday's New York session (20/November).

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The publication of a series of US economic data last week reassured markets that the Federal Reserve will not raise interest rates again. Instead, the decline in US inflation increased market speculation about when the Fed will start cutting interest rates. CME's FedWatch currently shows a 30% chance of a Fed rate cut starting March 2024.

"The weakness in the dollar is to do with the moves in rate markets, especially after the November Fed meeting and last week's CPI," said Dane Cekov, senior FX strategist at Nordea, although he added that there could be weakness in the dollar in the very short term.

However, Cekov added that there is a possibility that the dollar's weakness will only last for a very short period because, "From a technical perspective, the dollar now looks oversold against the euro. Usually, you'll see some sort of consolidation."

Experts also doubt that the weakening of the US dollar will be sustainable against several other currencies. These include the Japanese yen, Chinese yuan, Australian dollar, and Kiwi dollar.

Goldman Sachs thinks there is still limited room for USD/JPY to fall, as there is no real evidence of a US recession or signals of a Fed rate cut. They find the USD/JPY outlook "bumpy", but "the risks point to a stronger dollar for longer in 2024".

Carol Kong, a currency expert at the Commonwealth Bank of Australia, has an equally pessimistic view on AUD/USD and NZD/USD. She argues that the theme of "China's weak economic recovery" continues. This issue will continue to weigh on the yuan, Aussie, and Kiwi, as long as there is no evidence of a significant recovery in the Chinese economy.

Market participants will also continue to monitor the next various events to gauge the prospects of the Fed's interest rate cut and its effect on various major pairs. One of the closest events is the release of the FOMC meeting minutes tomorrow.