The US dollar reached its strongest level since April 2025, driven by persistent domestic inflation and expectations of upcoming Federal Reserve interest rate increases.
The greenback climbed as hotter-than-expected consumer price data reinforced market bets on monetary tightening. Meanwhile, European currencies faced headwinds from subdued regional growth forecasts.
The Dollar Index, which measures the US currency against a basket of major peers, climbed to 103,083 points, matching levels last seen on April 9, 2025, during the trade tensions under President Donald Trump. By 10:55 GMT, the index eased slightly by 0.10% to settle at 102,806 points.
The currency movement follows Tuesday’s release of the US Consumer Price Index (CPI), which exceeded analyst expectations with a 0.4% increase on a monthly basis. Combined with a restrictive tone from the central bank, these factors continue to support the dollar, according to Francesco Pesole of ING.
Markets currently price in a near-certain interest rate increase by the Federal Reserve in December. Projections point to a quarter-point or potentially a half-point adjustment.
The single European currency retreated 0.09% against the dollar to trade at 1.1101 dollars, after touching its strongest level against the euro since mid-May 2025 at 1.1066 dollars. Pesole said that the euro suffers from a marked undervaluation consistent with a risk premium tied to France.
In a macroeconomic briefing released Wednesday, Moody’s downgraded its French growth projections for 2026 to 0.2%, falling below domestic institutional estimates. The rating agency cited political uncertainty, rising borrowing costs, and budget constraints as pressures on economic activity.
While the US budget deficit exceeds 6% of GDP—surpassing France’s deficit—the United States retains the structural advantage of financing its debt at relatively low yields due to sustained global demand for its securities, explained Jane Foley of Rabobank.
| Currency Pair | Thursday Rate (10:55 GMT) | Wednesday Rate (22:00 GMT) |
|---|---|---|
| EUR/USD | 1,1101 | 1,1090 |
| EUR/JPY | 177,15 | 177,21 |
| EUR/CHF | 0,9229 | 0,9240 |
| EUR/GBP | 0,8360 | 0,8354 |
| USD/JPY | 159,58 | 159,79 |
| USD/CHF | 0,8314 | 0,8331 |
| GBP/USD | 1,3278 | 1,3275 |
While the European Central Bank is also expected to implement monetary tightening next month, the institution may hesitate to push rates higher past December due to acute growth concerns, Foley added. Concurrently, gold—serving as a competing safe-haven asset—declined 0.85% to 3.953,84 dollars per ounce.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
