Investing.com – The stock market has had a powerful run against the dollar this year, but it could see a short-term respite if the dollar’s weakening at the Federal Reserve meeting after December’s meeting hits again.

“Since 1999, the DXY Index’s return for the rest of the year following the December FOMC meeting has been negative 64% of the time,” Bank of America analysts said in a recent note.

This seasonal weakness in the dollar may provide some relief to the euro, which has been under dollar pressure for most of the year.

The potential respite may prove short-lived, however, as “January seasonality tends to be more bullish for the US dollar, with the DXY index higher 60% of the time,” analysts said.

Looking ahead to 2025, the bank outlined two potential scenarios for the EUR/USD pair:

In a base case scenario where the dollar consolidates after the FOMC meeting, analysts suggest that “USD bulls could consider OTM EURUSD digi trades in early January 2025 with better price levels.”

However, if the FOMC’s Summary of Economic Projections – scheduled to be released alongside the Fed’s December 18 interest rate decision – is more hawkish than current market expectations for interest rate cuts in 2025, the dollar could end the year stronger. In this case, “EURUSD put spreads would be preferred,” analysts said.