The king of the US dollar continues to maintain its strengthening momentum amid growing confidence that the Federal Reserve (Fed) will raise its interest rates at an upcoming policy meeting this week.
In the Asian session, the greenback strengthened around its highest level since May 2020, also following a 10 -year increase in US treasury yields that rose above 2%.
The displayed increase in bond yields reflected investor confidence for an interest rate hike, sinking the yen to a five -year low against the USD.
While the Fed is expected to be hawkish, the Bank of Japan (BOJ), which also meets this week, is expected to remain dovish despite expressing concerns over rising inflation.
Meanwhile, the Bank of England (BOE) will also hold a policy meeting this week which is expected to raise interest rates by 25 basis points.
Even so, the latest threat from economic sanctions on Russia following its attack on Ukraine is seen to affect the BOE's decision as the impact is also felt by the UK.
The pound continued to decline to its lowest level since November 2020 at the beginning of the week, while the euro was also gloomy at its weakest level in almost two years by trading below the 1.100 level against the USD.
Meanwhile, Ukraine-Russia talks over the weekend were reportedly positive as both sides stated there was progress in their talks on the war in Ukraine.
However, this optimism failed to support major currencies to rise, instead trading weak against the strong US dollar.
