The USD is on track for its best annual performance in nearly a decade, as a strengthening USA economy dampens expectations for a rate cut cycle by the Federal Reserve, while President-elect Donald Trump's threat of high tariffs supports bullish bets on the dollar.

The Bloomberg Dollar Index has risen over 7% year-to-date, marking its best performance since 2015. Due to Other central banks needing to intervene to support their local economies, all developed country MMFs have weakened against the USD.

"The main pillar supporting the dollar this year is the strong economy," said Barclays Forex Analyst Skylar Montgomery Koning, "This strength suggests that the Federal Reserve is entering a shallower rate cut cycle, maintaining USA interest rates above those elsewhere, which helps keep USD valuations at historically high levels."

As of today in 2024, the yuan, Norwegian krone, and New Zealand dollar are at the bottom of the G-10 MMF performance, having fallen more than 10% against the USD by December 27. The euro has dropped about 5.5% to around 1.04 USD. An increasing number of strategists expect the euro to face risks of falling to parity against the USD next year.

In the lead-up to and following the USA election, non-commercial speculative traders have steadily increased their bullish positions on the USD, with current holdings of USD Call contracts amounting to approximately 28.2 billion USD, the highest level since May.

"The current momentum of the USD strength aligns with the data soon to be released, and we believe the market has not fully absorbed our expectations regarding tariffs; in the medium term, our forecast still faces upside risks," wrote Analysts led by Goldman Sachs' Kamakshya Trivedi in a report on December 20, "especially if the strengthening sentiment translates into more sustained economic growth in the USA, despite the intensification of protectionist measures."