The dollar slipped on the last trading day of the year on Tuesday but was poised to clock strong gains in 2024 against almost all currencies as investors prepared for fewer US rate cuts and the incoming Trump administration.

The dollar's ascent, buoyed by rising Treasury yields, pushed the yen toward its lowest levels since July on Monday at around 158 per dollar.

The US currency fell against the yen on Tuesday, however, and was last down 0.14 percent at 156.65 yen. Nonetheless, the yen was on course for a 10 percent drop in 2024, its fourth straight year of decline against the dollar.

Japanese markets are closed for the rest of the week, and with most markets closed on Wednesday for the New Year's Day holiday, volumes are likely to be razor thin.

The dollar index , which measures the US currency versus six other major units, was down 0.12 percent at 107.92, just off a two-year high.

READ FULL STORY ONLINE

The index has risen 6.6 percent in 2024 as traders have cut back on bets of deep rate cuts next year.

Federal Reserve policymakers shocked markets earlier this month by cutting their interest-rate forecast for 2025 to 50 basis points of cuts, from 100 bps, wary of stubbornly high inflation. President-elect Donald Trump has also moved the dollar.

"Yields in the US have adjusted higher to price in the potential inflationary impact from the incoming Trump administration's policy agenda including tariff hikes, tighter immigration policy and maintaining loose fiscal policy," said Lee Hardman, senior currency analyst at MUFG.

The US dollar has risen against all currencies in 2024, with the index tracking the currency up 6.6 percent.

The possibility of US rates staying higher for longer has put a dent in most other currencies, especially those in emerging markets as traders worry about the stark interest rate difference between the United States and other economies.