Dollar Soars to Two-Year High as Rate Cut Hopes Fade

The US dollar reached its highest level in over two years, driven by Friday’s unexpectedly strong employment report that showed accelerating job growth and a 4.1% unemployment rate. This economic strength has dramatically shifted market expectations, with traders now questioning whether the Federal Reserve will cut rates at all in 2025, down from previous expectations of two quarter-point cuts. The dollar’s surge is creating widespread pressure on global currencies, particularly affecting the euro, which dropped to $1.0177, and the British pound, which fell to $1.21. The situation could intensify depending on Wednesday’s US inflation data and President-elect Trump’s upcoming policies on tariffs, taxes, and immigration, which could potentially fuel inflation. For the UK, the currency weakness is compounded by concerns over rising borrowing costs and potential government spending cuts expected in March.



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