Dollar's Steady Hold Amid Fed Minutes Anticipation

The U.S. dollar held steady above recent lows as traders awaited the Federal Reserve's December meeting minutes. Analysts expect further rate cuts, while China’s yuan surged to a two-year high against the dollar. The euro and sterling showed gains against the dollar, anticipating fiscal uncertainties and rate cuts.

The U.S. dollar maintained its strength above recent lows on Tuesday as traders eagerly awaited the release of the Federal Reserve's December meeting minutes. This financial document, perceived as crucial, could potentially reinforce expectations of further interest rate cuts in the coming years.

Amid thinning liquidity due to the end-of-year holidays, the dollar is set for its worst performance since 2017, with a yearly decline of nearly 10%. Meanwhile, China's yuan crossed a significant psychological threshold against the U.S. dollar, defying weaker guidance from its central bank as exporters offloaded dollars.

The euro and sterling showed resilience, achieving significant gains this year. Experts suggest the dollar could continue to face pressure due to shrinking interest rate differentials, fiscal uncertainties, and political instability. Nevertheless, some market strategists predict the dollar will stabilize and range trade around current levels amid limited scope for further Fed rate cuts.

(With inputs from agencies.)