Dollar Index Reaches Two-Year High Amid Fed's Cautious Rate Cut Approach

According to Odaily, the dollar index has surged to a two-year high as the market anticipates a more cautious approach to interest rate cuts by the Federal Reserve in 2025. This expectation is driven by the belief that policies proposed by President-elect Trump, including trade tariffs and tax cuts, could exacerbate inflation and limit the scope for rate reductions. Danske Bank's Mohammed Saraf noted in a report that the resilience of the U.S. economy has led the market to predict no more than two 25 basis point rate cuts throughout the year, which is expected to support the dollar. In December of last year, the Federal Reserve also indicated a slowdown in the pace of rate cuts.