The dollar on Monday is holding near a three-week high against major peers amid expectations that the Fed will cut interest rates this week, but then signal measured easing of monetary policy in 2025.

The dollar index against a basket of six major currencies at 10:04 showed no marked dynamics, trading near the level of 106.84, after rising to 107.18 on Friday for the first time since November 26.

The 'greenback' receives additional support from rising U.S. government bond yields. Traders are confident that the Fed will cut the interest rate by 25 basis points on Wednesday, but now expect that the central bank will not lower borrowing costs in January, according to CME's FedWatch tool.

'The U.S. economy is showing resilience in the face of high interest rates, and this means that potential inflation growth, if the economy overheats, poses a problem that the Fed will need to address,' said James Kniwton of Convera.