As traders rein in U.S. rate cuts in 2025 following robust economic data, the dollar hovered close to its best level in over two years on Tuesday. Meanwhile, market concerns regarding Britain’s fiscal health kept the weak sterling in the forefront.
The attention has been on President-elect Donald Trump’s ideas, which economists predict will increase growth but increase price pressures, as he returns to the White House next week.
The Federal Reserve’s stated gradual approach to rate decreases this year and the fear of tariffs have raised Treasury rates and the dollar, placing pressure on the euro, pound, yen, and yuan.
The euro hovered close to the more than two-year low of $1.0177 it struck on Monday, but it was stable at $1.02475 in early trading. Inching away from the nearly six-month low it reached last week, the yen was trading at 157.54 per dollar.
At 109.59, the dollar index, which compares the value of the US dollar to six other currencies, was up 0.16% from Monday’s 26-month high of 110.17.
Investor attention will be on the inflation report on Wednesday after a strong jobs report on Friday reaffirmed support for the U.S. central bank’s cautious approach to more monetary policy easing this year.
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