Dollar declines ahead of FOMC meeting and inflation data

Currently, the dollar’s weakening against major currencies gains momentum. This is largely due to the fact that investors are comparing the U.S. Federal Reserve's policy prospects with the possibility of recession amid high interest rates.

Ed Moya, a senior market analyst at Oanda, said that the dollar's recent weakening has a lot to do with an imminent end of the tightening cycle. The currency rate will depend on the Fed's decision to pause rate hikes for the near term.

The monthly U.S. consumer price inflation figures will also be released next week. These data should be posted about a day before the Fed policy meeting on December 14. This could play a key role in shaping long-term expectations for monetary policy.

According to RBC currency strategist Adam Cole, the U.S. consumer price index is currently considered the only indicator that matters for the dollar at the moment. In this regard, nothing much will happen until the results of the Central Bank meeting and price inflation data are released.