For the majority of the year, the Dollar Index has been gaining higher and higher. This, in turn, has been weighing on major currencies like the AUD, the GBP, the JPY, and the NZD. For example, the USD has strengthened by over 29% against the JPY, 16% against the GBP, and around 17% against the NZD. So, as we head into year-end and speculation starts to grow about when the Federal Reserve will announce a pause in rates this pattern is really interesting.

Notice how, over the last 25 years, between November 23 and December 30, the EURUSD pair has gained 16 times for an average of 1.96%. This means that should the Fed signal a pause in rates at its next rate meeting we could potentially see a nice shove higher in the EURUSD pair in line with its seasonal pattern.

Major Trade Risks: The major trade risk here is that previous seasonal patterns are not guaranteed to repeat each year and the Federal Reserve may stay more hawkish which would invalidate the outlook.

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