The US dollar is heading for its first weekly decline since the beginning of the month

 The dollar is heading for its first weekly decline against its major peers since the beginning of last month, retreating from a one-year high as traders turned their attention to when the US Federal Reserve will start raising interest rates.

The DXY dollar index, which measures the greenback against six major currencies, fell 0.1% to 93.945 points during Friday's trading. It is on its way to a decline of 0.19% this week, despite reaching its highest level since September 25 of last year at 94.563 points.

It is reported that improved market sentiment, which has led to higher global stocks, commodity prices and bond yields, is also affecting the safe-haven dollar. Only against the yen - another haven currency - the dollar managed to maintain the momentum of the past five weeks, rising 0.33% on Friday and touching 114.075 yen for the first time since December 2018.

The dollar has risen since early September on expectations that the US Federal Reserve will tighten monetary policy faster than previously expected amid an improving economy and higher energy prices. The minutes of the Federal Reserve's September meeting confirmed this week that stimulus scaling is certain to begin this year, although policymakers are deeply divided over inflation and what they should do about it.

Money markets are currently pricing in a 50:50 chance of a 25bp rate hike by July. Westpac strategists wrote in a note to a client that the dollar index looks a bit shaky, but any slippage should be modest with Fed tapering now imminent.

It is noteworthy that experts at Credit Agricole believe that the US dollar is expected to rise during the remainder of this year, coinciding with a clear increase in demand for the US dollar. Experts at the French bank indicated that an increase in the demand for the dollar was noticed in the futures markets recently, and this is also reflected in the widening of the exchange margins between currencies.

Economists at Credit Agricole Bank clarified that these developments and the increase in demand for the dollar reflect a number of factors, on top of which is the relative advantage of the US dollar price before the Fed cuts bond purchases.

The US dollar continued its losses until the end of the week, affected by US inflation data released on Wednesday, which clearly exceeded market expectations.