The U.S. dollar weakened on Monday while Bitcoin soared to an all-time high ahead of Donald Trump’s inauguration as U.S. president. Investors were keenly watching for any immediate policy moves that could impact financial markets.
The yen remained near a one-month high on expectations that the Bank of Japan would raise interest rates, while the Chinese yuan strengthened to its highest level since early January. Trading activity was light due to the Martin Luther King Jr. Day holiday in the U.S.
Bitcoin hit a new record of $109,071.86 before settling at $107,120, up 4.2%. The cryptocurrency’s surge follows Trump’s pledge to support digital assets, with expectations of executive orders aimed at fostering widespread crypto adoption.
However, analysts warn that any delays in implementing pro-crypto measures could trigger a “sell the news” reaction, potentially reversing gains.
Investors are closely monitoring Trump’s initial executive orders. Speaking at a rally on Sunday, Trump reiterated plans to impose strict immigration limits, fueling speculation about additional economic measures.
Goldman Sachs strategists foresee a possible 5% upside for the dollar over the next few months, though near-term volatility remains a risk as markets await clarity on trade tariffs. The dollar index fell 0.36% to 109.02, having reached a 26-month high of 110.17 last week.
“There are high expectations for Trump to announce trade tariffs under executive order, which could influence further U.S. dollar movements,” said Derek Halpenny, head of research global markets at MUFG. The dollar has climbed 4% since the November election, driven by anticipation of Trump’s economic policies.
The euro rose 0.48% to $1.032, rebounding from a two-year low of $1.0177 last week. Analysts suggest that if Trump invokes the International Emergency Economic Powers Act (IEEPA) for trade measures, it could signal large-scale tariff impositions.
“IEEPA action would indicate strong intent to pursue tariffs, which could impact global markets,” said Sjay Rajadhyaksha, research analyst at Barclays.
The yen traded at 156.34 per dollar after reaching a one-month high of 154.98 on Friday. Market sources indicate that the Bank of Japan is likely to raise interest rates this week unless Trump’s inauguration triggers market disruptions.
China’s yuan also gained, reaching 7.3190 per dollar before settling at 7.3214. The currency has remained resilient despite expectations of U.S. tariffs, as the People’s Bank of China continues to prioritize stability.
