The U.S. dollar hovered near a two-week high on Thursday, supported by higher Treasury yields and cautious sentiment ahead of key economic data that could influence the Federal Reserve’s policy outlook.
The dollar index, which measures the greenback against a basket of six major currencies, held steady after rising in the previous session as investors reassessed the timing and scale of potential U.S. interest rate cuts.
Market focus has shifted toward upcoming U.S. inflation and labour market indicators, which are expected to provide further clarity on whether price pressures are easing sufficiently for the Fed to begin lowering rates later this year.
“The dollar is finding support from resilient U.S. data and rising yields, which are making it difficult for other major currencies to gain traction,” said a senior FX strategist at a European bank.
The euro was little changed, struggling to build momentum amid weak growth signals from the euro zone, while sterling edged lower as investors weighed the Bank of England’s cautious stance on rate cuts.
In Asia, the yen remained under pressure near recent lows, with traders alert to the risk of official intervention as Japan’s authorities continue to warn against excessive currency moves.
Emerging market currencies were mixed, as higher U.S. yields dampened risk appetite despite modest gains in equities.
Investors are expected to remain cautious in the near term, with the dollar likely to stay supported until clearer signals emerge on the Fed’s policy direction.
