The dollar's December slide intensified against commodity currencies as portfolio managers executed year-end rebalancing strategies, market participants said. The Australian and Canadian dollars led gains against the greenback, buoyed by resilient energy prices and positioning adjustments ahead of 2026. Traders noted that liquidity conditions have thinned typical for the season, amplifying directional moves as large institutional orders hit the market.
Gold's upward trajectory continued for a fourth consecutive week, drawing support from escalating geopolitical tensions in the Middle East and Eastern Europe, according to precious metals strategists. The yellow metal's advance reflects both safe-haven demand and dollar-denominated weakness, with central bank purchasing providing a structural floor beneath the market. Meanwhile, crude oil benchmarks have stabilized at elevated levels as OPEC+ production discipline counters concerns about demand growth in key Asian markets.
Technical indicators suggest momentum has decisively shifted against the dollar across major pairs, with moving averages aligning in favor of further weakness, currency analysts observed. The dollar index broke below its 200-day moving average earlier this week, triggering algorithmic selling and forcing macro funds to reduce bullish positioning. Volatility surfaces in EUR/USD and GBP/USD have compressed to multi-month lows, indicating options markets are pricing an extended period of range-bound trading despite the underlying directional bias.
Bitcoin and digital assets attracted renewed institutional interest as traditional finance firms accelerated custody solutions ahead of regulatory clarity expected in early 2026. Crypto market participants report that corporate treasury allocations have increased month-over-month, mirroring the broader diversification away from dollar-denominated holdings. Looking ahead, traders will focus on January's central bank communications and the potential for policy pivots as inflation trajectories diverge across major economies.
Disclaimer: This analysis is AI-generated for educational purposes. Traders should verify all information and conduct their own research before making trading decisions.