$Dollar Surges to Fresh High Against Yen Amid Rising Oil Prices and Middle East Tensions
The US dollar reached a fresh 40-year high against the yen on Thursday, while the euro dipped after the European Central Bank (ECB) kept interest rates unchanged. The dollar's strength comes as oil prices surged to their highest level since May 26, with Brent touching $101.21 per barrel and U.S. crude jumping to $92.75 a barrel.
The ECB's decision to hold rates steady was expected, but the bank also hinted at the possibility of another rate hike in September. This has led markets to price in a 71% chance of a rate hike from the ECB at its next meeting.
Joseph Trevisani, senior analyst at FXStreet, noted that the dollar's strength is driven by renewed tensions in the Middle East and growing concerns about inflation pressures.
Markets are now pricing in a 35.8% chance for a rate hike of at least 25 basis points at the Federal Reserve's policy meeting next week, up from 11.8% a week ago, according to CME FedWatch.