Dollar Surge: Economic Data Sparks Investor Interest

The U.S. dollar reached its highest level in over two years, driven by strong economic data influencing Federal Reserve rate decisions. Traders anticipate changes in inflation metrics and possible U.S. tariffs. The euro and other currencies like the yen and yuan face pressures as global fiscal policies evolve.

The U.S. dollar surged to its highest in more than two years on Tuesday, driven by robust economic data which led investors to reassess their Federal Reserve rate cut bets, keeping potential U.S. tariffs in focus. Following last week's jobs report, which supported a cautious Fed stance, all eyes are now on upcoming inflation readings.

Traders are now pricing in lower Fed monetary easing this year, with U.S. Treasury 10-year yields having reached a 14-month high. Forex strategists suggest the dollar demand will remain strong unless upcoming inflation figures suggest otherwise.

The possibility of tariffs, combined with fewer expected Fed rate cuts, has bolstered the greenback's performance. Meanwhile, attention turns to the nomination hearing of Scott Bessent for U.S. Treasury Secretary, potentially impacting currency talks and fiscal projections amid shifting global economic strategies.

(With inputs from agencies.)