The dollar strengthened to its highest level in 13 months, boosted by expectations of a Fed interest rate hike and selling pressure on tech stocks.

The dollar strengthened to its highest level in 13 months amid expectations of another Fed interest rate hike this year and selling pressure on tech stocks, while the yen weakened to near its lowest level in almost 40 years.

On June 24, 2026, at 09:39 AM, Reuters reported that the US dollar continued to strengthen on Wednesday, reaching a 13-month high against a basket of major currencies as investors flocked to safe-haven assets amid a global sell-off in technology stocks and increasing expectations that the Federal Reserve (Fed) may raise interest rates again this year.

Profit-taking in technology and semiconductor stocks has pressured global stock markets after a series of strong price increases, causing investors to shift funds into safe-haven assets such as the US dollar and government bonds.

Meanwhile, market views on the direction of US interest rates have begun to shift significantly, after several Fed officials signaled support for a hawkish monetary policy citing the strength of the US economy.

The latest data from CME FedWatch reflects that investors give a 37% probability that the Fed will raise interest rates by 0.25% at its July meeting, up from just 8.5% the previous week. Meanwhile, the probability of a rate hike in September has surged to 70% from 29.1%.

The euro traded near its lowest level in a year at 1.1375 dollars per euro, while the pound weakened slightly to 1.3199 dollars after Alan Taylor, a member of the Bank of England's (BoE) Monetary Policy Committee, stated that keeping interest rates at their current level for an extended period remains the appropriate approach to addressing inflationary pressures.

The Australian dollar remained stable at US$0.6918 ahead of the latest Consumer Price Index (CPI) release, while the New Zealand dollar weakened to its lowest level in seven months at US$0.5665.

In addition to interest rate factors, geopolitical uncertainty is also boosting demand for the dollar as a safe-haven asset. This is due to ongoing disagreements between the US and Iran on several key aspects of the peace agreement, including the nuclear program and control of the Strait of Hormuz, leading markets to question the sustainability of the agreement.

The Japanese yen continues to face pressure, trading at 161.57 yen per dollar after weakening to 161.93 yen per dollar earlier this week, its weakest level in two years.

Analysts warn that a strengthening dollar that breaks through 161.96 yen could lead to the yen's sharpest decline since 1986, despite continued warnings from Japanese officials about market volatility.

Sayuri Shirai, a former member of the Bank of Japan (BOJ) board, believes the yen could weaken to 165 yen per dollar if the Fed raises interest rates again this year. Meanwhile, a summary of comments from the BOJ's June meeting indicated that some board members supported further interest rate hikes to bring the policy rate closer to a level deemed appropriate for the economy.

Reference: reuters.com

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