The USD continued to appreciate in the trading session on June 24, reaching its highest level in 13 months against a basket of major currencies as investors turned to safe-haven assets amid the technology stock market plummeting and growing expectations that the US Federal Reserve (Fed) will raise interest rates.
Fluctuations in the global financial market continued to increase after a wave of sell-offs of technology and semiconductor stocks, pulling global stock indexes down and boosting demand to hold the USD and US government bonds.
Along with that, Fed officials continuously sent tough signals as the US economy still maintained significant strength despite high interest rates.
According to the CME FedWatch tool, the market currently assesses the probability of the Fed raising interest rates in the July meeting at 36%, a sharp increase compared to 8.5% just a week ago.
For the September meeting, the probability of interest rate hikes has now exceeded 70%, much higher than the previous 29.1%.
The USD Index – a measure of the strength of the greenback against a basket of currencies including the Euro, Japanese Yen and many other major currencies – has risen to 101.51 points, the highest level since May 2025.
Mr. Ray Attrill - Head of Foreign Exchange Strategy at National Australia Bank - said that the USD is still the top priority safe-haven asset in the market.
The momentum is still leaning towards the USD. However, many positive factors have been reflected in the price. For the USD to continue to rise strongly from here, the market may need to witness a deeper decline in risk sentiment or expectations of further interest rate hikes," he said.
On the currency market, the Euro traded at 1.1363 USD/euro, close to the lowest level in a year.
The British pound slightly fell to $1,3194/pound after Mr. Alan Taylor - member of the Monetary Policy Committee of the Bank of England (BoE) - said that maintaining interest rates at the current level for a long time is a suitable response to inflationary pressure.
Meanwhile, the Australian AUD – a currency sensitive to the risk appetite of the market – traded around 0.6918 USD, the lowest in 11 weeks.
Mixed inflation data in Australia has made monetary policy prospects less clear, reducing expectations of a possible interest rate hike.
The New Zealand dollar also fell by about 0.3%, to 0.5654 USD, the lowest level in seven months.
In addition to the interest rate factor, safe haven demand is also supported by disagreements that continue to appear between the US and Iran.
The two sides have not yet reached a consensus on some important contents within the framework of the peace agreement, including issues related to the nuclear program and the mechanism to control the Strait of Hormuz.
These disagreements are raising doubts about the sustainability of the previous temporary peace agreement, thereby promoting cash flow to assets considered safer such as the USD.
Investors are currently focusing their attention on important US inflation data, especially the Personal Consumption Price Index (PCE) which will be released this week. The report results are expected to provide more signals about the Fed's interest rate roadmap in the coming months and may decide the next trend of the USD in the global market.
