Dollar Dominance and Bitcoin Boom: A Trump-Era Economic Upswing

The U.S. dollar surged to near a four-month high while bitcoin reached new peaks as investors bet on favorable trade policies under incoming President Trump. The euro and yuan weakened amid expectations of U.S. economic strength and aggressive trade measures, leading to inflationary concerns and changing interest rate forecasts.

The U.S. dollar climbed toward its highest point in four months against major currencies on Tuesday, riding on the anticipated economic policies of the incoming Donald Trump administration. Meanwhile, bitcoin extended its record-breaking rally, reaching new heights as traders positioned themselves for a potentially favorable crypto environment under Trump's leadership.

The euro languished near a seven-month trough, and China's yuan hit more than a three-month low, influenced by potential tariffs imposed by Trump. The U.S. dollar index saw an increase of 0.16% to 105.59, closing in on its strongest point since July, while bitcoin surged to an all-time high of $89,637, reflecting market optimism.

Speculative trading dynamics were influenced by Trump's Republican Party securing control of Congress, facilitating his pro-growth agenda of tax cuts and reduced federal government interference. Market forecasts of a Federal Reserve interest rate cut in December were reduced, factoring in potential inflationary pressures from trade and immigration policies targeting Europe and China.

(With inputs from agencies.)