The US dollar is rising despite the year-end holidays

The US Dollar Index stabilized on Tuesday and is still trading near its two-year high, which was achieved last week, and is trading today around 108.20.

This strength was driven by rising US Treasury bond yields and expectations of an interest rate cut by the Fed in 2025.

Expectations from the Federal Open Market Committee pointed to a 50 basis point cut in interest rates over the course of the year, indicating that interest rates will remain higher than previously expected as the last September meeting suggested a 4-fold cut.

In addition, tariff threats from President-elect Trump have reduced the prospects for capital outflows from the United States, further supporting the dollar.

However, the unexpected decline in US consumer confidence pointed to potential challenges to economic growth, which could affect the dollar's strong rally.

As this coincides with the holiday season, a period of low trading volumes that usually increases market volatility and amplifies price fluctuations.