The dollar has continued its winning streak as traders anticipated the Federal Reserve’s decision to maintain elevated interest rates. The Bloomberg Dollar Spot Index marked its fourth consecutive week of gains, the longest stretch since February, following the Fed’s decision to keep rates steady and forecast only one reduction in 2024. This positive outcome has been well received by speculative traders who had increased their bets on a stronger dollar leading up to the policy decision.

After a period of reducing their bullish dollar positions in May, traders added over $6 billion in bets on dollar gains in the week ending June 11, according to data from the Commodity Futures Trading Commission. This surge in positive sentiment is the most significant since late April, indicating growing confidence in the dollar’s performance.

Helen Given, a foreign-exchange trader at Monex, highlighted the impact of the Fed’s forecast on the dollar’s strength, noting that the interest-rate differentials between the US and other major economies in the Group of 10 are in favor of the dollar’s appreciation.

The divergence in monetary policies between the Fed and its global counterparts has provided crucial support for the dollar, particularly as central banks like the European Central Bank and Bank of Canada have initiated easing measures. Additionally, political uncertainties in France, triggered by President Emmanuel Macron’s decision to call for snap elections, have weighed on the euro, further boosting the safe-haven appeal of the dollar and currencies like the Swiss franc.

Overall, the dollar’s recent performance reflects the market’s confidence in the US economy and the Fed’s cautious approach to monetary policy adjustments. As global economic conditions continue to evolve, traders will closely monitor the impact of central bank decisions on currency movements and market sentiment.