The US dollar hovered near a four-month high on Tuesday, while Bitcoin surged to a new all-time peak as investors continued to favor assets that could benefit from the forthcoming Donald Trump presidency.

The euro remained weak, close to a seven-month low, and the yuan struggled near a more than three-month low as Europe and China faced the threat of tariffs under Trump’s policies.

The US dollar index, which tracks the currency against six major peers including the euro, rose 0.07% to 105.49 at 0037 GMT, after reaching 105.70 on Monday, marking its highest level since July 3.

Bitcoin extended its rally, reaching $89,637 (Rs 7.44 lakh) on Tuesday, with analysts predicting the cryptocurrency could approach $100,000 by year-end. Trump has expressed intentions to make the US the "crypto capital of the planet."

Kyle Rodda, senior financial markets analyst at Capital.com, noted, "The expectation of US economic outperformance and aggressive trade practices under Trump is continuing to drive the US dollar higher." He added that markets are reconsidering expectations of Fed interest rate cuts, with a December reduction now in question.

With Trump’s Republican Party projected to control both houses of Congress starting in January, expectations are high for policies focused on tax cuts and reducing the federal government’s size. However, potential tariffs and stricter immigration policies are contributing to a shift in market expectations, with the likelihood of a 0.25% Fed rate cut in December now pegged at 65%, down from nearly 80% last week.

Trump has already warned the European Union of potential consequences for not buying enough US exports, specifically targeting the automotive sector, while also threatening China with blanket tariffs of 60%.

The offshore yuan fell to 7.2337 per dollar on Monday, its weakest point since August 2, before recovering slightly to 7.2241.

The euro dropped to $1.0629 overnight, the lowest since April 22, and was last trading at $1.0658. Political instability in Germany, particularly surrounding Chancellor Olaf Scholz’s coalition partner, the Greens, further weighed on the euro as calls for an early parliamentary vote and snap elections intensified.

Sterling remained largely unchanged at $1.28645, while the Japanese yen continued to weaken, edging closer to a three-month low of 154.715 per dollar, last seen at 153.865.