Is the Euro about to take off? The probability of the US dollar falling in December is 80%, with an additional 2% room to decline.

Recently, the US dollar index has continued to weaken, and EUR/USD has risen for 8 consecutive days. When will this trend end? Looking at historical patterns makes it clear—data from December over the past 10 years shows that the dollar index has fallen in 8 of those years, with an 80% probability, and an average decline of 0.91%, making December the weakest month of the year.

Why is the dollar more vulnerable to declines in December?

On the surface, this decline stems from market expectations of continued rate cuts by the Federal Reserve. According to CME FedWatch Tool, the market currently expects a 25 basis point rate cut in December with an 89.2% probability, and there are also two rate cuts priced in for 2026. As long as rate cut expectations persist, the dollar remains susceptible to being shorted.

But the deeper logic goes far beyond that. Steven Barrow, Head of G10 Strategy at Standard Bank, points out that the dollar faces a “triple threat”—the Bank of Japan may raise interest rates, the new Fed Chair candidate is dovish, and there are negative impacts from trade tariffs. Recent data shows that the market has priced in an 80% chance of the Bank of Japan raising rates in December.

Is there still hope for the dollar with Haskett’s rise?

Trump has hinted at possibly appointing Chief Economic Advisor Haskett as Fed Chair, and as soon as this news broke, the market immediately turned bearish on the dollar. Van Luu, Head of Global Foreign Exchange at Russell Investments, believes Haskett’s policy stance will be more dovish, which is negative for the dollar and positive for the euro. If this candidate is confirmed, EUR/USD could break through this year’s high of around 1.19, reaching a four-year high.

A more aggressive forecast comes from Tim Baker, a macro strategist at Deutsche Bank. He is optimistic that the dollar will return to near its Q3 lows, implying the dollar index has room to fall by another 2%. Even if this decline doesn’t complete in the remaining weeks of this year, it is highly likely to be realized in early 2026.

As of December 3, the dollar index stands at 99.24, down for 9 consecutive days; EUR/USD is at 1.1637, continuing to push higher. Based on historical win rates and current fundamentals, the probability of the dollar remaining under pressure in December is indeed quite high.