Dollar Stands Tall Amid Hawkish Fed Rhetoric and Rate Hikes

The US dollar held steady near its two-month high on Thursday following strong economic data and a hawkish shift in Federal Reserve rhetoric. The dollar's strength sent the euro to a two-month low of $1.1369.

Meanwhile, the Swiss Franc fell against the euro and the dollar after the Swiss National Bank left rates unchanged while reiterating its willingness to intervene in foreign exchange markets. The Norwegian crown rose after the central bank raised its policy interest rate by 25 basis points to 4.50% on Thursday and said it may hike again.

The US two-year Treasury yields hit their highest since May 2024, driven by strong business activity data that reignited inflation concerns. Francesco Pesole, forex strategist at ING, warned that the move is starting to look stretched relative to fundamentals, and investors should remain cautious in calling for a bottom in the dollar.