The Dollar weakened on Monday as a crucial week began, with investors focusing on Donald Trump's return to the White House and his inaugural speech later in the day to gauge his upcoming policies.

Elsewhere, the Japanese Yen gained ground, holding onto a one-month high reached last week, as traders bet on the Bank of Japan raising its policy rate this week, bringing short-term borrowing costs to their highest levels since the 2008 global financial crisis. 

Trading volumes are anticipated to be low due to US markets being closed for the Martin Luther King Jr. Day holiday.

In addition, cryptocurrency investors are staying upbeat, anticipating executive orders from Trump designed to ease regulations and boost the adoption of digital assets, Reuters reports.

Trump, who courted crypto supporters by promising to be a “crypto president,” launched a digital token on Friday that briefly surged past $70, reaching a market value over $15 billion. It was trading around $58 at the time of writing, according to CoinMarketCap.

Bitcoin, the world’s largest cryptocurrency, dipped slightly to $102,550 on Monday, after soaring 80% since the US election in early November and hitting a record high last month. 

The focus is now on the policies Trump will implement on his first day in office. During a rally on Sunday, Trump announced plans to impose strict immigration limits.

Goldman Sachs strategists predict US policy changes will bolster Dollar strength but warned of short-term risks due to market expectations for quick tariff actions.

They anticipate a gradual flow of high-profile tariff-related news, similar to Trump’s first presidency. “We think the storm is just rolling in. We expect it will pay to be patient,” they stated.

The Dollar index, which tracks the US currency against six rivals, was down 0.16% at 109.16, yet remained near a 26-month high of 110.17 reached last week.

The index has climbed 4% since the election as traders expect Trump's policies to spur growth while also fuelling inflation, which could lead to higher interest rates for an extended period.

In addition, the Euro gained 0.26% to $1.029775 but stayed close to a two-year low reached last week due to tariff concerns. Meanwhile, Sterling increased 0.27% to $1.2201.