As of November 22, 2024, the U.S. dollar is on track to achieve its longest weekly gains in over a year, driven by rising geopolitical tensions and increased demand for safe-haven assets. The Bloomberg Dollar Spot Index rose by 0.7% on this date, reaching a two-year high, marking the eighth consecutive week of gains, the longest streak since September 2023 [7aa18773]. This surge is largely attributed to concerns surrounding Russia's ongoing war in Ukraine and expectations of inflation stemming from potential tariffs and tax cuts proposed by former President Trump [7aa18773].
The dollar's strength has been further supported by robust U.S. economic data, including a resilient labor market and rising bond yields. The Dollar Index (DXY) recently rallied to 106.70, up from 106.65 earlier in the week, reflecting investor confidence in the U.S. economy [a67315d9]. Federal Reserve Chair Jerome Powell's cautious stance on interest rates has also contributed to the dollar's performance, with market expectations for a December rate cut decreasing to around 58% [a67315d9].
In contrast, the euro has fallen to its lowest level since 2022, driven by shrinking business activity in the euro area, which has further widened the gap between the dollar and its European counterpart [7aa18773]. Analysts suggest that the dollar may even approach parity with the euro if current trends continue [7aa18773].
Looking ahead, upcoming data releases, including U.S. manufacturing PMI and consumer sentiment figures, are expected to bolster the dollar's strength. However, strategists warn that while the dollar may experience a pullback towards 106.00 or 105.50, it is likely to resume its upward trend, contingent upon these economic indicators and the Fed's monetary policy [a67315d9][5f02c3f5]. Overall, the interplay of strong economic fundamentals and geopolitical dynamics positions the dollar favorably in the global market [5ab17b10].