Dollar Hits Multi-Year Highs Against Euro and Yen
The dollar surged to a five-month high against the euro and its strongest level against the Japanese yen since 1990, driven by remarks from Federal Reserve Chair Jerome Powell and escalating geopolitical tensions between Israel and Iran.
Powell’s comments regarding the potential need to keep interest rates higher for longer, combined with stickier-than-expected inflation, have bolstered the dollar. The greenback’s strength has been further reinforced by stronger-than-expected growth data, including robust retail sales figures for March.
Traders are now adjusting their expectations for potential rate cuts by the Federal Reserve, with fewer cuts being priced in for the year. The first cut is now anticipated in September, compared to previous expectations for a cut as early as June.
Amid the surge in the dollar, escalating geopolitical tensions between Israel and Iran have also contributed to a safe-haven boost for the U.S. currency. The situation has led to increased market sensitivity and awareness of potential FX intervention, particularly in the context of the Japanese yen.
In summary, the dollar’s recent surge to multi-month highs against major currencies has been influenced by a confluence of factors, including Fed commentary, economic data, and geopolitical developments.
