At the beginning of the holiday week, markets behaved cautiously, with a slight decline in risk appetite among investors. Market volume shrinks before the midweek close, reducing trading hours and overall exposure to the money market. The biggest data this week is the RBA meeting minutes and CPI inflation in Tokyo, Japan.

Here’s what you need to know on Tuesday, December 24:

The US Dollar Index (DXY) rose slightly on Monday, continuing to struggle from the 108.00 level as investor confidence took a step back heading into the holiday trading week. DXY continues to trade near recent highs, with the Greenback Index closing in the green for all but three of the last 11 trading sessions. Monday’s gain of about a quarter of one percent leaves bids at the upper end of last week’s end-of-week pullback, but price action remains constrained below Friday’s high of 108.50.

The EUR/USD pair fell again on Monday, being rejected from the 1.0450 level as markets struggle to find reasons to push the price of Fiber higher. Last week’s decline from the Federal Reserve’s (Fed) revised Summary of Economic Outlooks (SEP), or “scatter plot” of interest rate expectations, showed that the Fed itself expects far fewer rate cuts in 2025 than markets initially expected . The euro is entering its lower bound, and the lack of significant European data or speeches from European Central Bank (ECB) policymakers will ensure that EUR/USD actions will remain reactionary to US market themes.

GBP/USD continues to break out from the chart near 1.2550. UK gross domestic product (GDP) growth in the third quarter was slightly lower than expected, diverging from the already delicate second quarter result. UK GDP for Q3 was printed flat at 0.0% q/q, below the expected 0.1% hold, and annualized data also fell to 0.9% from 1.0%.

AUD/USD is trading near over two-year lows near 0.6250. The Reserve Bank of Australia (RBA) will publish its latest meeting minutes on Tuesday early in the week, and Australian investors are hoping that the only significant data out of Australia this week will provide further hints of a near-term rate cut. The leeway for nuance from the RBA’s previous statement appears to have left the door open for a short-term rate cut, but it is becoming increasingly hard to ignore the fact that the overly cautious RBA has kept interest rates unchanged for nine months in a row.

USD/JPY is also holding steady, testing the area north of 157.00. Yen investors will be waiting for Japanese consumer price index (CPI) inflation at the end of the week, which is expected to accelerate again to 2.5% y/y, compared to 2.2% in the previous period.