The US dollar remained strong against other major currencies, reaching its highest level since November. The dollar index, which tracks the performance of the dollar against a basket of six other currencies, was slightly down at 106.59 but was on track for an 11th straight week of gains. The euro, in particular, has weakened against the dollar and was still close to its eight-month low of $1.0482. Experts attribute the euro’s weakness to the stronger dollar, driven by higher US yields, and the divergence between the US and European economies.

US benchmark 10-year yields reached their highest level since 2007, indicating that the Federal Reserve’s policy rates will remain high for longer. Several Fed officials, including Federal Reserve Bank of Minneapolis President Neel Kashkari, have warned that there may be more interest rate hikes in the near future. The strength of the US economy, as evidenced by positive economic data, continues to defy expectations of an economic slowdown.

The Japanese yen also weakened against the dollar due to the surge in oil prices and fears of tight global supplies. The yen’s weakness raises speculation of potential intervention by Japanese authorities to prevent further depreciation. The 150 yen per dollar mark is seen as a critical level that could trigger intervention. Japanese Finance Minister Shunichi Suzuki stated that Japan would not rule out any options to address excessive volatility in currency movements and warned against speculative yen movements. Meanwhile, the British pound and the Swiss franc remained under pressure against the dollar at six-month lows and the lowest since March, respectively.

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