USD Index Faces Pressure as Fed's "QE Lite" Fuels Risk Appetite

The US dollar weakened against major currencies as futures retreated from record highs, with markets interpreting Federal Reserve policy as supportive of risk assets through what analysts term "QE Lite." This accommodative stance has set up expectations for a potential Christmas rally in equity markets, typically negative for the dollar's safe-haven appeal. The Fed's continued balance sheet management and liquidity provisions are maintaining favorable financial conditions despite official rate levels. Currency traders are repositioning ahead of year-end flows, with the dollar index showing signs of topping after recent strength. Risk-sensitive currencies like AUD and NZD could benefit from improved sentiment, while traditional safe havens JPY and CHF may see reduced demand. The setup suggests potential dollar weakness through year-end as investors rotate into higher-yielding assets. Technical indicators point to key support levels being tested across major dollar pairs.