The U.S. dollar steadied following two consecutive sessions of declines. Market participants are reevaluating their positions after an extensive rally since early October, driven by political developments surrounding the U.S. election and, more recently, President-elect Donald Trump’s cabinet appointments. These developments are being closely monitored for potential impacts on the Federal Reserve’s future policy actions.

Despite the recent pullback, the greenback remains on an upward trajectory, having rebounded from September’s lows. This momentum is largely supported by strong economic data and market expectations of fewer rate cuts from the Federal Reserve. While a December rate cut is still anticipated, Fed Chair Powell’s recent hawkish comments suggest that further cuts may be limited in 2025, which should provide further support to the dollar, at least in the near term.

Looking ahead, attention could turn to the upcoming S&P Global PMI and Michigan Consumer Sentiment reports. Any increase in consumer confidence is likely to support the dollar. Stronger consumer sentiment could indicate higher consumer spending, which may lead to inflationary pressure and may encourage the Federal Reserve to adopt a more hawkish stance which drive Treasury yields to the upside again.