The US dollar has undoubtedly emerged as the strongest currency in the forex market for four consecutive weeks, triumphant in all pegged currency pairs. The dollar index has remained above 100 throughout this week and is currently at 100.5 during the Asian session today.
The US seems to be favored by many positive factors that have strengthened the currency over the weeks, especially over increasing concerns for imminent interest rate hikes.
The US Dollar attained its highest point on Thursday following Powell’s speech at the international monetary fund’s meetings. Here Powell disclosed that the US Central Bank would move aggressively to curb inflation. He further revealed that a half-point interest rate increase would be considered immediately next month during the next Fed meeting. Powell believes that the Fed must act immediately in hiking the interest rate now that inflation is currently running higher than expected.
This news seems to have so much favored the US dollar. Thus we saw the dollar index rise to its maximum point at 101 yesterday. Similarly, virtually all the USD crosses in the market have remained bullish.
USDJPY has risen to 129.400, its maximum exchange rate for four years, before a bit of pullback to 128.590 during the Asian session.
USDCHF has risen to a very high point at 0.95540 and is still pushing higher.
The US dollar has performed higher against the Euro, placing EUR/USD down to its lowest point in five years, exchanging at 1.08400.
Above all, more proactive action and tighter monetary policies are to come from the Fed at the next meeting to enable them to bring the current consumer price index (CPI) at 8.5% down to the targeted 2%.
