Dollar strengthens ahead of Fed decisions, Bitcoin soars

The US dollar continues its upward movement and approaches a new peak, as traders anticipate a Federal Reserve interest rate decision this week that could initiate a cut. Nonetheless, the Fed is expected to signal a moderate easing path for 2025. The dollar is supported by rising yields on US Treasury bonds. In parallel, Bitcoin experiences a significant price surge above the magical mark of $105,000. This development is fueled by signs that future President Donald Trump might introduce a strategic Bitcoin reserve, similar to the US strategic oil reserve. During his campaign, Trump promised to make the US the "crypto capital of the world." The Japanese yen continues its decline, particularly after reports indicated that the Bank of Japan is likely to refrain from an interest rate hike. The yen struggles with the impact of its weakest trading week since September. The British pound is under pressure following surprising economic data indicating a slowdown. This occurs in close timing with the announcement of monetary policy decisions by the Bank of England, just hours after the Bank of Japan meeting. Fed central bankers remain vigilant against potential inflation threats, particularly with the upcoming Trump administration. James Kniveton, an experienced currency trader at Convera, views the robust US economic data as a double-edged sword that could challenge the Fed should prices rise with an overheating economy. Another focus is on exchange rates. The US dollar index remains stable at 106.86 points after reaching a peak of 107.18 points on Friday. The dollar slightly gained against the yen, while the British pound and the euro also made gains. Tony Sycamore, an analyst at IG, watches the Bitcoin market with anticipation and expects the focus to now shift to the next symbolic mark of $110,000.