Dollar Strengthens as US Rate Forecasts Prevail

24 Dec 2024 , 09:31 AM

Due to investors’ continued focus on the possibility of higher-for-longer U.S. interest rates, the dollar led the market Tuesday, while other currencies were battling close to historic lows.

The sterling fell 0.01% to $1.2534, while the euro recently traded $1.0403, not far from a two-year low it reached in November.

As year-end draws near, trading volumes are probably going to decline during a week with fewer holidays. The rates theme is also likely to continue to be the primary driver of foreign exchange market movements due to the absence of significant economic data releases.

The yen, which has already down 4.7% this month and is causing traders to be on edge for any intervention from Japanese authorities, was pegged close to a five-month low and last stood at 157.19 per dollar.

In sharp contrast to the Federal Reserve’s hawkish tone just a day earlier, when it forecast a controlled pace of rate decreases in 2025, the Bank of Japan (BOJ) maintained rates on hold last week and remained evasive about when it could raise rates again.

As a result, the Japanese currency struggled to recover its losses, and the yen fell.

In other news, the dollar index was close to a two-year high of 108.54 against a basket of currencies. At 108.10, it was last seen.

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