The US dollar is trading near its highest level in more than two years on Tuesday, which it achieved yesterday's session by breaking through the 110.00 levels upwards, as traders reduce their bets on a cut in US interest rates in 2025 after strong economic data.
Persistent signs of the resilience of the US economy prompted traders to reduce their expectations for a rate cut by the Fed this year.
Markets are now pricing in a cut of just 29 basis points this year, a sharp drop from the 50 basis points that were expected earlier this month.
Investors are also preparing for key inflation data this week, which may further affect interest rate expectations.
The expected interest rate cut by a quarter of a percentage point is now likely to be postponed until the second half of the year.
Also, with President-elect Donald Trump returning to the White House next week, the focus will be on his policies, which analysts expect to boost growth but increase price pressures.
In the end, the dollar retained its strength against most major currencies, but it weakened slightly today in anticipation of the producer price index data to be released on Tuesday.
