CORRECTION - Danske Bank: Markets Price Less Than Two Rate Cuts, Supporting the Dollar

Forex - As the Fed is expected to adopt a more cautious approach to interest rate cuts in 2025, the dollar has risen to its highest level against the euro and a basket of currencies in two years. Markets are betting on the inflationary triggers of President-elect Donald Trump's proposed trade tariffs and tax cuts, which could limit interest rate cuts. Mohamad Al-Saraf from Danske Bank stated, "With a resilient U.S. economy, the markets are now pricing in less than two 25 basis point cuts for the entire year, supporting the dollar." The Fed signaled in December that it would slow the pace of interest rate cuts. The DXY dollar index reached as high as 108.835. According to FactSet, the euro dropped to 1.0315 dollars.