US Dollar Breaks 13-Month Peak
The US dollar continued its strengthening on Wednesday (June 24th) and reached its highest level since mid-2025. This strengthening occurred as investors grew more confident that the Federal Reserve still had the potential to raise interest rates, while a major sell-off in the technology sector prompted market participants to seek refuge in safe-haven assets such as the US dollar and government bonds.
The US dollar index rose to around 101.42 to 101.69, reflecting strong demand for the greenback amid growing market uncertainty. Pressure in the global technology and semiconductor sectors prompted investors to reduce positions in riskier assets. Funds exiting AI stocks and tech megacaps then flowed into assets perceived as safer, particularly the US dollar.
Expectations of a Fed rate hike were the main driver of the dollar's rally. Fed officials are increasingly adopting a hawkish tone as the US economy remains strong and inflation remains under control. The market is now pricing in the possibility of a larger interest rate hike, possibly even as early as July if economic data supports it.
The strengthening dollar is putting significant pressure on other major currencies. The euro weakened to its lowest level in more than a year, as markets saw the policy divergence between the Fed and the European Central Bank widening. In Europe, policymakers still have to contend with lingering inflationary pressures from the Middle East conflict, but at the same time, economic indicators are beginning to show a clearer slowdown.
The pound briefly found technical ground after Bank of England official Alan Taylor signaled that maintaining interest rates for longer remains the right option. However, British assets remain overshadowed by a weak domestic economy and political uncertainty following the resignation of Prime Minister Keir Starmer. Meanwhile, the Australian dollar remained flat at around US$0.6905 despite higher-than-expected core inflation.
In Asia, the yuan and yen remained under pressure. The yuan weakened after the People's Bank of China set a weaker central rate for the fourth consecutive day. The Japanese yen also hovered near multi-decade lows, with USD/JPY hovering around 161.70. While some Bank of Japan members support further interest rate hikes, the market remains more focused on the dollar's strength and the wide interest rate differential between Japan and the United States. (arl)
Source: Newsmaker.id
