The US dollar held near its highest level in 19 months on Friday, following strong gains throughout the week driven by growing expectations of a larger-than-usual US interest rate hike. The rally pushed the Japanese yen towards the 160-per-dollar level, putting traders on alert for possible intervention by Japanese authorities.
US Treasury yields climbed after President Donald Trump said Washington did not need an agreement with Iran, while investors assessed the possibility that the Federal Reserve could raise interest rates by more than the usual increment next month.
Two-year Treasury yields rose by 34 basis points over the past two trading sessions, marking their largest two-day increase in three and a half years.
The euro fell 0.1% to $1.1049, hovering near its lowest level against the US currency since April 2025. On a weekly basis, it declined 0.8%, heading towards its biggest weekly loss since late September.
Federal Reserve officials warned this week that inflation in the United States remained elevated. Some indicated they would be prepared to raise interest rates by 50 basis points if price pressures did not ease.
According to CME Group’s FedWatch tool, traders are pricing in a 14.5% probability of a substantial interest rate increase next month, whereas this possibility had been entirely ruled out last week.
Investors are also monitoring turbulence in technology stocks following the departure of Nvidia Chief Executive Jensen Huang, as the sector faces existing pressure from concerns over financing and regulatory issues.
The yen was little changed at 159.875 per dollar, remaining close to its lowest level since early September and intensifying concerns over possible intervention.
Japanese Finance Minister Satsuki Katayama said on Friday that the government would take appropriate measures to address currency fluctuations, after the yen briefly breached the 160-per-dollar threshold on Thursday.
The US Dollar Index, which measures the greenback against a basket of major currencies, slipped 0.05% to 103.17, remaining near its highest level since April 2025.
The Australian dollar has fallen approximately 2.5% over the past month, making it the worst-performing G10 currency against the US dollar and the only one facing the prospect of an interest rate cut next year. It was last trading at $0.68.
The US dollar was also broadly stable against the Swiss franc at 0.835, hovering near its highest level in a month.
