Investors price in potential Federal Reserve rate increases this year, lifting the dollar to its strongest weekly performance since early 2024.
The U.S. dollar extended its rally for a fourth consecutive session, supported by rising Treasury yields as markets anticipate Federal Reserve rate hikes in 2024. The greenback’s strength comes amid a broader shift in investor sentiment, with traders adjusting positions ahead of key economic data and central bank signals.
The euro slipped 0.1% to $1.1701, poised for its largest weekly decline in two months. The dollar index, measuring the currency against a basket of peers, rose 0.7% this week to 98.57, its strongest performance since the onset of the Iran war. The yen briefly weakened but recovered after Bank of Japan comments hinted at potential rate hikes if economic conditions remain stable.
Meanwhile, the offshore yuan strengthened for an eighth straight day, trading near three-year highs as U.S.-China trade talks showed signs of progress during a summit between Presidents Joe Biden and Xi Jinping.