Dollar Strengthens on Solid U.S. Data as Bitcoin Hovers Below Record High

The U.S. dollar is on track for a second straight weekly gain, supported by stronger-than-expected economic data that has eased pressure on the Federal Reserve to cut interest rates soon. The dollar index held firm at 98.456 early Friday, set for a 0.64% weekly rise, following last week’s 0.91% increase. Retail sales rebounded in June, and jobless claims hit a three-month low, reinforcing economic resilience. The index reached 98.951 on Thursday, its highest since June 23.

Meanwhile, the yen stayed weak at 148.60 per dollar amid political uncertainty ahead of Japan’s upper house elections, with polls suggesting the ruling coalition could lose its majority. This uncertainty complicates ongoing tariff negotiations with the U.S., especially as Japan faces the threat of a 25% auto tariff from August 1.

Bitcoin remained stable near $119,899, slightly below its record high of $123,153.22 reached earlier this week. The rally came as Congress passed legislation to establish a regulatory framework for dollar-pegged stablecoins.

Despite recent gains, the dollar index is still down 9.3% for the year due to a steep sell-off in March and April, triggered by investor concerns over President Trump’s unpredictable trade policies and fiscal strategies. Ongoing fiscal worries, including a massive spending and tax cut bill, and Trump’s public criticism of Fed Chair Jerome Powell, continue to cloud sentiment.

The euro climbed 0.25% to $1.1626 but remains down 0.59% for the week. The British pound rose 0.13% to $1.3436, trimming its weekly loss to 0.41%. Analysts warn that U.S. policy instability may still weigh on the dollar going forward, despite its recent resilience.