US President-elect Donald Trump’s inauguration on Monday should underpin the USD Index (DXY) this week, DBS' Senior FX Strategist Philip Wee notes.

Fed to become more cautious on rate cuts

"Trump had pledged to impose tariffs on his first day of office, particularly on goods entering the US from Canada, Mexico, and China. We expect the Fed to keep rates unchanged at 4.25-4.50% at the FOMC meeting on January 28-29."

"The Fed will likely become more cautious on rate cuts from Trump’s tariffs lifting US inflation expectations. Treasury Secretary Yellen warned that the reinstated statutory debt limit would be reached on January 21, with her agency taking extraordinary measures through March 14."