Dollar set for worst annual performance since 2017.

The U.S. dollar is on track to fall about 9.3% this year, its weakest annual showing since 2017. Analysts say the currency may face further pressure as U.S. yield advantages narrow with expected Federal Reserve rate cuts.

The U.S. dollar has weakened noticeably this year and is on course for its poorest annual result since 2017. The decline has been driven by shifts in interest-rate expectations and changing investor sentiment. Some banking analysts expect further softness if the Federal Reserve moves to reduce rates while other major central banks pause. At the same time, patterns in recent years mean early January moves could change the near-term picture. What was reported: - The broad dollar index is down roughly 9%–9.3% for the year and is set for its weakest annual performance since 2017. - A noted bank analyst said narrowing yield differentials could keep the dollar under pressure if the Federal Reserve cuts rates and other G-10 central banks have finished easing. - Another research note observed that currency gains in December have often reversed in January in recent years, which could create a rebound risk for the dollar. - Minutes from the Fed’s recent meeting showed some officials were cautious about near-term cuts, which briefly supported the dollar but did not change the larger annual decline. Summary: A weaker dollar this year has been linked to changing interest-rate expectations and shifts in risk sentiment, and it has influenced exchange rates for a range of currencies. How the dollar moves next will depend on central bank decisions and market sentiment in early January. Undetermined at this time.