The Dollar Holds Near Highs as Trump's Inauguration Looms

The U.S. dollar remained near a more than two-year high on Monday, amidst heightened investor focus on President Donald Trump's inaugural address, expected to provide insights into his immediate policy agenda.

Japanese Yen Edges Higher

The Japanese yen gained slightly, holding near last week's one-month high, as traders anticipate a potential interest rate hike by the Bank of Japan (BOJ) this week.

Market Activity Expected to Be Subdued

Trading activity is likely to be limited due to the closure of U.S. markets.

Eye on Middle East Developments

Investors are monitoring the Middle East following a ceasefire between Hamas and Israel, which saw the release of hostages and Palestinian prisoners.

Cryptocurrency Market in Anticipation

Cryptocurrency enthusiasts eagerly await executive orders from Trump aimed at easing regulatory hurdles and promoting the adoption of digital assets. Trump has previously expressed support for cryptocurrencies and launched a digital token that briefly surged in value.

Focus on Trump's Policy Enactments

Attention is firmly on the policies Trump will implement on his first day in office. He has indicated plans to impose limits on immigration and repeal Obama-Biden administration executive orders.

Dollar Index Remains Elevated

The dollar index, tracking the greenback against six major currencies, held near a 26-month high of 110.17. Traders expect Trump's policies to boost growth and inflation, resulting in higher interest rates for an extended period.

Tariffs Under Scrutiny

Traders remain cautious about potential tariffs, which could escalate trade tensions and support the dollar.

Interest Rate Expectations Shift

Recent data and comments from Federal Reserve officials have softened expectations for interest rate cuts. Markets now anticipate two rate cuts in 2025.

Yen Supported by BOJ Hike Anticipation

The yen continues to hover near a one-month high against the dollar, as sources indicate the BOJ is likely to raise rates this week, barring major market disruptions.

European Currencies Steady

The euro and pound sterling showed modest gains, but remain near recent lows due to concerns about the economic outlook in their respective regions.