Dollar Climbs to the Highest Level of the Year, FED Action Would Dictate Movement Furthur

The dollar index climbed to 2021 high, triggered by soaring inflation in the U.S. raising expectations of the Federal Reserved to raise interest rates.

Dollar index which tracks the greenback against a basket of six other currencies traded 0.3% higher at 95.073 and this level of the dollar index was last observed in 2020.

New peak of the dollar index is supported by widening spread between 5-year U.S. treasury and equivalent yield in Japan and Germany.

The appreciation of dollar pressured the Thai baht to depreciate to 32.905 inching up by 0.30% as of Thailand time 16:42 hours.

If the FED does not respond to soaring inflation with hike is rates there are possibilities the dollar could see some weakness which would add support level to the Thai baht.

UOB’s strategists sees the downward momentum in Thai baht has slowed down and likely to trade between 33.10 and 33.60, as reported by Fxstreet.