US Dollar Holds Firm Amid Hawkish Fed Comments

The US Dollar has maintained its strength against major currencies, hovering above 101.00 on the USD Index. This comes after rising by over 0.5% and hitting a two-month high on Wednesday. The dollar's resilience is attributed to upbeat data and hawkish remarks from Federal Reserve Governor Michael Barr.

Barr's comments included assertions that 'further rate hikes are likely needed' to control inflation, which has increased due to strong growth and a solid labor market. This reinforces expectations for additional policy tightening and supports the dollar.

ING's FX strategists caution that the dollar's rally may be overstretched relative to fundamentals. They note that the move is starting to look stretched if data or risk appetite cools down.