The U.S. Dollar Index (DXY) has rallied following a robust December jobs report, which saw nonfarm payrolls increase by 256,000 and the unemployment rate fall to 4.1%, according to a recent analysis by BofA Global Research. This stronger-than-expected labor market performance has reduced the likelihood of further Federal Reserve rate cuts, with BofA analysts noting, "We think this A+ jobs report closes the door for additional rate cuts." The report highlights that income growth remains supportive of consumption, with the aggregate payrolls index rising 0.4% month-over-month and 5.4% on a three-month annualized basis. As a result, the DXY rose approximately 0.4%, reaching new highs since November 2022, as the market adjusts to the possibility of eventual Fed hikes. BofA suggests that ongoing policy divergence and the strong labor market will likely continue to support the dollar, despite its already high valuation.