Between the commencement of November and the culmination of December 2023, the price of dollar index futures exhibited a decline of approximately 5.5%, as reported by the CME exchange.

This depreciation in the USD stemmed from traders’ expectations of a forthcoming interest rate reduction by the Federal Reserve in March. Consequently, the prevailing sentiment at the conclusion of 2023 ushered in an upswing in stock indices, with gold reaching a historic peak on December 4, and an increase in the value of cryptocurrencies.

However, the advent of 2024 has witnessed a marked shift in sentiment, as evidenced by the dollar index futures price, which surged by more than 1% during the sessions on January 3-4.

This can be construed as follows: 

During the pre-holiday period, there existed a discernible emotional element that fostered an optimistic outlook for the future. 

Following the conclusion of the holidays, market participants realigned their expectations concerning the Federal Reserve’s inclination towards policy easing.

Data released yesterday indicated that there is no unequivocal indication of the Federal Reserve contemplating rate reductions, as its members continue to perceive the necessity for maintaining a restrictive policy stance for an extended duration.

In the initial days of 2024, there was a correction of the bullish sentiment that prevailed at the conclusion of 2023. In the cryptocurrency market, known for its pronounced margin trading activity (involving the use of borrowed capital to initiate positions), this correction escalated into a cascade of selling, causing the BTC/USD exchange rate to plummet swiftly to the $41,000 mark. This decline constituted a deceptive bullish breakout from the consolidation zone observed at the end of 2023.

Additionally, it’s worth highlighting the downturn in the NASDAQ technology stock index. As reported by Bloomberg, this index has exhibited its poorest performance at the outset of the year since 2001, a period notable for the dot-com crash.