Dollar Soars as Global Political Risks Weigh on Euro and Pound

The US dollar has reached its highest level in nearly four months, rising over 2% in just seven trading sessions. While domestic factors such as a strong economy and momentum in big tech contribute to the dollar's gains, global political risks are also weighing on other major currencies.

The euro and pound are both struggling due to concerns about their respective countries' economic policies. In the UK, the new Prime Minister's stimulus measures could clash with the Bank of England's tightening monetary policy, potentially repeating a 2022 scenario that saw the pound plummet and led to Liz Truss's resignation.

In France, public debt is expected to exceed 120% of GDP by 2027, while the cost of servicing that debt will nearly double by the end of the decade. This has prompted investors to flee the country, widening the yield spread between French and German bonds.