The Dollar climbed to a two-week high on Thursday as fresh volatility gripped stocks and precious metals, while traders counted down to rate decisions from the European Central Bank and the Bank of England.
The Dollar index, which measures the US currency's performance against a basket of six others, was up 0.14% at 97.82 at the time of writing, rising for a second day.
The greenback has regained momentum this week as stocks moved into risk-off mode while markets digest the halfway point of the US corporate earnings season.
The Euro was last down 0.2% at $1.1790 ahead of the ECB meeting, where rates are widely expected to remain unchanged. Investors will be watching the post-policy press conference closely for clues on the future direction of interest rates.
Currently, markets assign a very low probability to a rate cut this year. Despite the market volatility seen since the start of 2026, the Euro remains only around 0.4% higher than its level at the ECB’s December meeting.
However, the single currency is approximately 13% stronger against the Dollar compared with a year ago, raising concerns among policymakers about its potential impact on regional price pressures. Meanwhile, inflation in the eurozone has dropped to around 1.7%, below the ECB’s 2% target.
The Pound fell 0.5% to $1.358 ahead of the Bank of England’s policy decision, where rates are also expected to remain unchanged.
Furthermore, on Wednesday, Federal Reserve Governor Lisa Cook said in a speech that she is more worried about stalled progress on inflation than a weakening labour market, signalling she is unlikely to support further rate cuts until tariff-driven price pressures ease.
Fed funds futures currently imply an 88% probability that the US central bank will keep rates unchanged at its next two-day meeting ending on 18th March, although expectations for a rate cut have edged up to 12% from 9.4% the previous day, according to CME Group’s FedWatch tool.
Against the Yen, the Dollar rose 0.14% to 157.11. Following the threat of coordinated US-Japanese intervention to support the Yen on 23rd January, the Dollar had fallen to a three-month low of 152.1.
As concerns have grown ahead of Sunday’s election, the Dollar has climbed around 3%, recouping about three-quarters of that initial drop.
In addition, against the offshore Yuan, the Dollar was unchanged at 6.9439 following a phone call between US President Donald Trump and Chinese President Xi Jinping, during which they discussed trade, security issues, and US arms sales to Taiwan.