The US dollar strengthened on Friday, reaching a two-year high against a basket of currencies as investors expect fewer Federal Reserve rate cuts this year and the US economy is seen outperforming its peers globally.
The dollar’s rally has been driven by the Fed’s more hawkish stance and the resilient US economy. This, combined with the uncertainty surrounding the Trump administration’s policies, including hefty import tariffs and tax cuts, has made the dollar an attractive safe haven.
Against other currencies, the euro tumbled 0.86% to a two-year low of $1.022475, while sterling gained 0.09% to $1.2391. The prospect of widening rate differentials between the US and other countries also contributed to the dollar’s dominance.
The dollar index is on track for its strongest weekly performance in over a month, with expectations of just 45 basis points worth of Fed rate cuts this year compared to more than 100 bps expected from the European Central Bank and roughly 60 bps from the Bank of England.
Source: https://finance.yahoo.com/news/dollar-headed-best-week-since-013527589.html