The U.S. dollar hovered close to a two-month peak on Thursday after Federal Reserve Chair Jerome Powell maintained a cautious stance on interest rate cuts, boosting confidence in the greenback. The dollar index remained steady at 99.77, just below Wednesday’s 99.987 high, and is poised for its first monthly gain of the year, advancing more than 3%.
Market sentiment improved as concerns over U.S. tariffs eased amid new trade agreements. Earlier fears of the dollar’s decline, triggered by President Donald Trump’s aggressive tariff policies, have subsided, fueling the currency’s rebound. Analysts point to a hawkish Fed and resilient U.S. economic data as key drivers of the dollar’s momentum.
The euro rose 0.25% to $1.1433 but remains on track for a 3% monthly loss, while the British pound traded at $1.3248, heading for a 3.5% monthly decline. Traders have dialed back expectations for Fed rate cuts this year, now pricing in around 35 basis points of easing by December.
Global trade developments also influenced currency markets. South Korea’s won strengthened 0.3% to 1,389.20 per dollar after reaching a tariff agreement with Washington. Meanwhile, Trump imposed a 50% tariff on most Brazilian goods and continues negotiations with India.
In Asia, the yen hovered near a four-month low at 149.29 ahead of the Bank of Japan’s policy decision. Investors are watching closely for any hint of further tightening as the BOJ balances inflationary pressures and growth risks.
Elsewhere, the Australian dollar edged up to $0.6443 and the New Zealand dollar rose to $0.5906, though both remain set for monthly losses of around 2–3%.
The dollar’s rally underscores shifting global currency dynamics as markets brace for evolving trade and central bank policies.


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