Dollar Hits Two-Week High Amid Energy Shock Concerns

The US dollar hit a two-week high on Wednesday due to growing concerns about the economic impact of the energy shock and diverging monetary policy paths across major economies.

The dollar tends to benefit from higher oil prices because the US economy is less exposed to energy shocks than many other major economies, attracting demand at the expense of currencies such as the euro and yen.

Economists expect the European Central Bank to finish its hiking cycle by the end of the year while the Federal Reserve will likely be just beginning to raise rates, said George Brown, senior economist at Schroders. This should widen rate differentials in favor of the dollar and lead to a weaker euro.