The outlook for the U.S. dollar appears increasingly bleak, with relative yield differentials emerging as a major headwind as the Federal Reserve pivots toward potential rate cuts in December.

As noted, the Fed's dovish shift coincides with strengthening data that suggests most other major central banks will either hold rates steady or hike in coming months - creating divergent monetary policy paths.

A key signal for the dollar's trajectory lies in the rapid narrowing of U.S. Treasury yield premiums. The two-year Treasury yield spread against major peers recently hit its lowest level in over a year, erasing the rebound in yield differentials that began in October - when the dollar bottomed after its worst first-half decline since 1973.