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US dollar reaches new high on Wednesday
The US dollar continues to rise, approaching its highest levels in several weeks against major currencies, following expectations of a nearly 90% probability of the Federal Reserve raising interest rates. Markets remain watchful as they await the central bank’s decision on interest rates. Analyses indicate that raising rates might support the dollar only modestly, with a potential decline if the bank signals that additional hikes are unlikely or if it chooses not to increase rates at all. In such a scenario, the dollar could drop by more than 1%. The market movement coincided with rising bond yields, with the dollar gaining against the euro, British pound, and Japanese yen. The latter two are influenced by expectations of monetary policy tightening in Japan and steps to bring Japanese investors’ funds back home. This outlook reflects anticipation that the Federal Reserve will take multiple measures to combat inflation amid pressure from rising energy prices. The Japanese yen and regional currencies such as the South Korean won and the South Korean won remain supported, driven by expectations of policy tightening in Asia and ongoing financial inflows.
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