Dollar Holds Steady as Markets Monitor Inflation and Policy Shifts

The U.S. dollar maintained its strength against major currencies while markets await crucial U.S. inflation data. Investors anticipate inflationary policies under Donald Trump's administration. Treasury yields rise as expectations for Federal Reserve rate cuts dampen. Meanwhile, bitcoin halted its surge, and geopolitical tensions affected the euro.

The U.S. dollar remained stable below a six-and-a-half-month high against major currencies on Wednesday, as investors paused 'Trump trades' in anticipation of upcoming U.S. inflation data. The currency has benefited from Republican Donald Trump's presidential victory, reaching near-highs last seen in early May.

Investors are factoring in lower taxes and trade tariffs from the Trump administration, which are expected to boost inflation. The possibility of Republicans securing full control of Congress could further enable the president-elect to advance his policy agenda.

U.S. Treasury yields have also increased amidst speculation that the Federal Reserve might temper future rate cuts. However, market momentum slowed as attention turned to the forthcoming Consumer Price Index release. Bitcoin's momentum eased as well, declining after reaching an all-time high the previous day.

(With inputs from agencies.)