Core Viewpoint - The Bloomberg Dollar Index has seen a slight increase alongside long-term U.S. Treasury yields, while G-10 currencies are experiencing narrow fluctuations amid light trading as the year comes to a close [1][8]. Currency Movements - The Bloomberg Spot Dollar Index rose by less than 0.1%, reversing earlier declines during the Asian and London trading sessions [2][9]. - The Euro/USD pair fell by 0.2% to 1.1750 [4][11]. - The GBP/USD pair continued its downward trend in the New York trading session, dropping 0.3% to 1.3468 [7][14]. - The USD/JPY pair increased by 0.2% to 156.45, while the AUD/USD rose by less than 0.1% to 0.6697, outperforming other G-10 currencies against the dollar [7][14]. - The USD/CAD remained stable at 1.3696 [7][14]. Economic Insights - The Bloomberg Dollar Index has declined approximately 8% this year, heading towards its largest annual drop since 2017 [3][10]. - Shaun Osborne, Chief FX Strategist at Scotiabank, noted that if the dollar strengthens further, it could target levels seen at the beginning of 2023, potentially paving the way for broader strength in regional currencies like the yen and won [3][10]. - The Federal Reserve's December meeting minutes indicated that most officials believe further rate cuts would be appropriate if inflation declines as expected over time [3][10]. Options Market Data - DTCC data shows significant option expiry levels at 1.1750 (2.28 billion euros) and 1.1800 (647 million euros) [5][12]. Central Bank Policy - The Swedish central bank's latest policy meeting minutes suggest that officials are confident that maintaining borrowing costs steady over the next year will support economic recovery and stabilize inflation near the 2% target [6][13].

Group 1 - The core viewpoint is that the recent U.S. airstrikes against Iran have prompted investors to exit significant short positions on the dollar [1] - The airstrikes are seen as a catalyst for hedge funds and CTAs to unwind their bearish dollar positions, indicating a potential shift in market sentiment towards a slow appreciation of the dollar [1] - The euro, pound, and Swedish krona are particularly vulnerable to large momentum long position liquidations due to this shift in sentiment [1] Group 2 - The strategist continues to favor long positions in euro/Swedish krona as a hedge against deteriorating global risk sentiment and the fading of 'sell America' sentiment, with a target price of 11.40 [1]