**US Dollar Hits Six-Month High: AUD/USD Holds Steady Ahead of RBA Decision**
*Original reporting by Matt Weller, Forex.com. Supplemented with updated market context and analysis.*
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The US dollar continued its strong performance, reaching a six-month high against major currencies in the most recent trading sessions. The greenback’s rise has been largely linked to higher US Treasury yields, ongoing hawkishness from the Federal Reserve, and increased risk aversion amid global economic concerns. As investors looked ahead to key central bank decisions, attention focused on the Australian dollar, which remained steady against its US counterpart before the Reserve Bank of Australia’s (RBA) policy meeting.
## US Dollar Index Reaches Multi-Month High
The US Dollar Index (DXY) climbed to its highest level since early November, settling near 105.00 as of the latest trading day. Multiple factors contributed to this persistent appreciation:
– **Resilient US economic data**: Recent releases, such as ISM Services PMI and factory orders, have generally underscored that US economic activity remains robust. Despite signs of cooling inflation, growth indicators continue to beat expectations.
– **Positive labor market signals**: Weekly jobless claims have remained low, and the latest monthly non-farm payrolls report surpassed forecasts, further reinforcing confidence in the growth outlook.
– **Fed’s hawkish outlook**: A series of speeches and meeting minutes indicated that Federal Reserve officials are cautious about cutting rates too soon, supporting market expectations for rates to remain elevated for longer.
– **Rising US Treasury yields**: The yield on the benchmark US 10-year Treasury note reached 4.30 percent, offering attractive returns for dollar-denominated assets and pulling demand away from riskier investments.
## EUR/USD Slumps: European Weakness Weighs
The euro dipped toward the 1.0700 handle as the US dollar surged. The currency pair’s decline can be predominantly attributed to economic headwinds in the euro area and diverging central bank stances.
For context:
– **Euro area PMIs**: Purchasing Managers’ Indexes in the eurozone continued to indicate contraction in key sectors, especially manufacturing.
– **Inflation trends**: Eurozone inflation, though still above the European Central Bank’s (ECB) target, has cooled more sharply than expected, fueling speculation that the ECB may soon pause or even cut rates.
– **ECB guidance**: Recent communications from ECB officials have been less hawkish, in contrast to their Fed counterparts. This divergence allows the dollar to draw ample capital inflows at the expense of the common currency.
## Yen Near Intervention Levels as BOJ Remains Dovish
USD/JPY flirted with the psychologically significant 150.00 level, rekindling traders’ memories of past Bank of Japan (BOJ) interventions. The yen’s weakness is closely tied to the BOJ’s ultra-loose stance, in stark contrast to the tighter policies observed in the US
Read more on AUD/USD trading.