On Monday, the US dollar saw a notable rise, with the dollar index increasing by half a percent, surpassing the 106.2 mark. This marks a recovery from last week’s losses and signals renewed strength in the US dollar, driven by a combination of factors tied to US economic performance and geopolitical tensions.

Resilient US Economy Supports Dollar Strength

The rise in the US dollar was primarily supported by the continued resilience of the US economy, with strong growth prospects heading into 2025. This economic stability has drawn investors' attention, favoring the dollar as a safe-haven currency. Additionally, the ongoing deteriorating economic outlook in other regions, such as Europe and Asia, contributed to the dollar’s relative strength.

BRICS Tariff Threats Boost Dollar

Another factor boosting the dollar’s value was a recent statement from US President-elect Donald Trump, who threatened BRICS member countries with 100% tariffs if they create or support a new currency aimed at replacing the dollar. This rhetoric increased uncertainty among traders and supported the dollar, as it underscored the US’s dominance in the global economic system.

Euro Faces Decline Amid Political Uncertainty in France

The euro also faced downward pressure, largely due to political uncertainty in France. The far-right National Rally party in France has been vocal in claiming that the French government rejected their calls for more budget concessions, increasing political instability and weighing on the euro. As the euro weakened, the dollar benefited from the currency shift.

Dollar Rebounds Against Yen Amid BoJ Rate Hike Speculation

Meanwhile, the US dollar also regained strength against the Japanese yen, as traders remained divided on the timing of the next rate hike by the Bank of Japan. While some traders anticipate a rate hike in the near future, uncertainty over Japan’s economic outlook and the timing of any adjustments to the country’s ultra-loose monetary policy caused the yen to weaken, benefiting the US dollar.

Conclusion

The US dollar gained traction on Monday, bolstered by positive US economic data, a pullback in the euro, and ongoing geopolitical risks. The currency also benefited from the political uncertainty in France and **speculation about future Bank of Japan policy changes. As investors continue to weigh the outlook for global economies and central bank policies, the dollar remains a focal point in the currency market.