Bitcoin Surges Past $105,000 as Dollar Nears Three-Week High Ahead of Fed Meeting

Dollar's Resilience Amid Fed Expectations

The U.S. dollar is hovering near a three-week peak against major currencies as traders anticipate a rate cut from the Federal Reserve this week, while also signaling a cautious approach to easing in 2025.

Bitcoin Breaks New Ground

In a remarkable turn of events, Bitcoin has soared above $105,000 for the first time, driven by indications that President-elect Donald Trump is considering a strategic bitcoin reserve. This news has buoyed the cryptocurrency market significantly.

Yen and Sterling Struggle

Meanwhile, the yen is struggling to regain its footing after experiencing its worst week since September, following reports that the Bank of Japan may skip a rate hike. Sterling is also under pressure due to a surprising economic contraction reported last week.

Market Dynamics

The dollar has gained additional support from rising U.S. Treasury yields, with traders expecting a quarter-point rate reduction on Wednesday. However, speculation suggests that the Fed may not implement another cut in January. As inflation persists above the central bank's 2% target, analysts warn that the upcoming administration's policies could be inflationary.

Currency Movements

As of the latest updates, the U.S. dollar index was stable at 106.86, with the dollar adding 0.1% to 153.87 yen. Bitcoin has surged as much as 3.6% from Sunday’s close, reaching an all-time high of $106,533. Trump's announcement regarding a potential U.S. bitcoin reserve has significantly impacted market sentiments.