The US dollar remains strong against other major currencies, with the dollar index near its highest level since November. The index has gained 2.86% in September, its largest monthly rise in a year. The euro, in particular, has been weakened by the dollar’s strength, hovering near an eight-month low. Experts predict that if the euro falls below its January low, it could reach its lowest point this year, potentially approaching parity with the US dollar. The dollar’s strength is attributed to higher US yields and the relative resilience of the US economy compared to Europe.

The rise in US yields has also put pressure on the Japanese yen, which is nearing its weakest level in 11 months against the dollar. Market participants see the 150 yen per dollar zone as a potential trigger for Japanese intervention, as it did last year. Japanese finance minister, Shunichi Suzuki, warned against speculative yen moves and emphasized that Japan would not rule out any options in response to excessive volatility in currency markets.

While the pound experienced a slight increase against the dollar, it remains near six-month lows. The Swiss franc is also under pressure, reaching its lowest level since March against the dollar. The US dollar’s strength is expected to persist unless there is another negative shock for Europe, reinforcing the cyclical divergence between the US and European economies.

Overall, the US dollar continues to gain momentum against other major currencies, supported by rising US yields and stronger economic data, particularly compared to Europe. The euro and yen have been particularly affected, while the pound and Swiss franc have also experienced downward pressure. Central banks, such as the Bank of Japan, may need to intervene if these currency trends persist and threaten excessive volatility.

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