The dollar rose to its highest level since November: Traders are betting on a Fed rate hike
Since the start of the year, the dollar has risen by nearly 2% / Photo: Unsplash/Giorgio Trovato
The dollar rose to its highest level since November 2025, Bloomberg reported. The Bloomberg Dollar Spot Index gained 0.4% during trading on June 23. Since the beginning of 2026, it has risen 1.7%.
Another index— the ICE U.S. Dollar Index, which tracks the dollar's value against a basket of global currencies—reached a more than one-year high on Tuesday.
The dollar is currently strengthening on expectations that the U.S. Federal Reserve will raise interest rates this year, according to Bloomberg. Added to this is the dollar’s role as a safe-haven asset amid market volatility and spikes in oil prices due to the conflict between the U.S. and Iran, Bloomberg reports. The parties are engaged in negotiations: this has eased pressure on energy prices, though the inflationary effect may persist. This only reinforces market expectations that the Fed will raise rates, the agency notes. Traders are now pricing in two rate hikes of a quarter of a percentage point by early 2027, according to Bloomberg.
"The dollar has room to rise further," Mizuho strategist Jordan Rochester told Bloomberg. “The dollar typically strengthens ahead of Fed rate hikes, and the market is now pricing in a scenario in which a new cycle [of hikes] could begin in September.”
During trading on June 23, the euro fell to a one-year low after comments by European Central Bank President Christine Lagarde led to lower expectations for ECB rate hikes, according to Barron’s. The yen is also under pressure: the market believes that the Bank of Japan is not raising rates fast enough to halt the currency’s decline, which is why traders remain wary of possible currency intervention, notes Bloomberg.
This article was AI-translated and verified by a human editor
