Dollar Strengthens, Yen Struggles

2 Jan 2025 , 10:15 AM

After a solid year of gains against most currencies, the U.S. dollar began 2025 on the upswing Thursday. Meanwhile, as investors consider the possibility of U.S. interest rates remaining high for an extended period of time, the yen fell to its lowest level in over five months.

Early in the year, the market will be concentrating on the Trump administration and its plans, which are anticipated to increase growth and increase price pressure, supporting U.S. Treasury yields and increasing demand for the dollar.

The currency market has been hampered by the significant interest rate differential between the US and other nations, which has caused the majority of currencies to fall precipitously against the US dollar in 2024.

Not even the yen, which dropped over 10% for the fourth consecutive year. On the first trading day of 2025, it was lower at 157.54 per dollar, not far from the five-month low that was reached on Tuesday, which made traders cautious about Japanese authorities stepping in.

For the remainder of the week, Japanese markets are closed.

In early trading, the dollar index, which compares the value of the US dollar to six other currencies, was at 108.53, barely missing Tuesday’s two-year high. In 2024, the index increased by 7%.

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