The US dollar closed the last trading day of last week with a gloomy movement after failing to maintain the strengthening momentum of the previous day.
However, the US dollar last week managed to show excellent performance in 6 weeks, showing an encouraging opening of 2025 for the king of currencies.
With this situation, analysts see great potential for the US dollar to continue its strengthening following the signals received at the last FOMC meeting of 2024.
Although interest rates were lowered, Federal Reserve (Fed) Chairman Jerome Powell has stated that the central bank will lower interest rates cautiously.
The signal to slow down the easing of monetary policy gives the US dollar the advantage again to strengthen at least for early 2025.
The labor market, which is still considered strong, and inflation that is still 'stubborn' to fall to the central bank's target level have driven an increase in United States (US) treasury yields, thus also supporting the increase in the value of the US dollar.
The strengthening of the US dollar will be more pronounced if the latest US inflation figures show a higher increase.
For this week, initial indications will be obtained from the US NFP employment report for December, which the Fed will evaluate for further monetary policy setting.
In addition, analysts are excited to see the transition of the White House administration under the leadership of Donald Trump, who will return for a second term.
The Trump administration's new policies will have an impact on taxes and business, expected to strengthen growth, but warn of rising inflation.
Investors are likely to take a cautious stance in the near future until the inauguration date takes place.
