The dollar index fell on Tuesday and the euro reached a four-month high as investors waited for signs of the Federal Reserve’s interest rate decrease.

The US dollar is expected to have its worst performance versus a basket of currencies since 2020 as Fed rate cuts reduce its appeal.

Analysts predict a significant decline in the US economy in 2024, but the Fed is expected to keep the funds rate and inflation gap narrow.

Inflation falling faster than the Fed’s benchmark rate can tighten monetary conditions more than intended and increase the risk of a rough economic landing.

Dollar gains are expected to reach 8.68% this year.