Dollar Surge Amid Trade Tensions: Global Currencies Feel the Heat

The U.S. dollar strengthened against major currencies as the Federal Reserve signaled no rush to cut interest rates. Concerns over U.S. trade tariffs affected market sentiment, causing declines in the Australian and New Zealand dollars. Fed policymakers remain cautious amid economic uncertainty.

The U.S. dollar rose against major currencies following its strongest performance in three weeks, buoyed by the Federal Reserve's indication of a steady interest rate approach. The currencies of Australia and New Zealand, however, continued to decline, pressured by concerns over President Donald Trump's trade tariffs, affecting global economic sentiment.

The dollar index, which measures the currency against six peers, increased by 0.21% to 104.01 by early Friday GMT. This came after a 0.36% rise on Thursday. The market had recently seen a dip to a five-month low of 103.19 amidst worries that Trump's aggressive trade policies might lead to a U.S. recession.

Meanwhile, the Fed's policy stance remains cautious, with Chair Jerome Powell stating no rush for rate cuts, despite ongoing tariff tensions. The euro and yen experienced slight declines, and the Australian and New Zealand currencies faced significant losses driven by trade worries and economic concerns.

(With inputs from agencies.)