The US dollar rose significantly on Thursday, benefiting from the increase in US Treasury yields. This strong performance placed major currencies, such as the Japanese yen, the British pound, and the euro, under significant pressure near their multi-month lows amid uncertainty about potential changes in trade policies.
At the beginning of 2025, attention turned to the policies of US President-elect Donald Trump, who is set to return to the White House on January 20. Analysts expect his policies to stimulate economic growth but also potentially raise inflation rates, creating a sense of anticipation in the markets.
These concerns pushed US Treasury yields to their highest levels since April 2023. For instance, the yield on the 10-year Treasury note rose to 4.73% on Wednesday before slightly retreating to 4.6709% on Thursday.
This increase in bond yields bolstered the dollar’s position against other currencies. The British pound was among the most affected, falling to $1.2239 on Thursday, its lowest level since November 2023. Notably, this decline occurred despite UK government bond yields reaching record highs.
As for the euro, it fell to $1.0302, remaining close to its two-year lows, as market concerns persisted over the possibility of further declines amid ongoing uncertainties regarding trade policies.
In Japan, the yen remained under pressure near the 160 yen per dollar level, a threshold that prompted Japanese authorities to intervene in the market last year. Although the yen recovered slightly on Thursday to settle at 158.15 yen per dollar, risks remain elevated.
