The dollar rebounded on Wednesday after hitting its lowest point in 14 months against the euro, benefiting from a technical correction and profit-taking activity.
The greenback appreciated by 0.46% against the single currency, trading at $1.1129 per euro. Earlier, it had fallen to $1.1214, a level not seen since late July 2023.
This significant rebound of the dollar also allowed some traders to capitalize on profits following the dollar’s recent poor performance, often referred to as the “buck.”
Additionally, the dollar gained support from a further increase in U.S. interest rates, with the yield on 10-year U.S. Treasury bonds rising in six of the last seven trading sessions.
Many market participants are choosing to invest in short- and medium-term Treasury securities rather than the dollar itself, as their prices appreciate due to falling yields resulting from monetary easing by the Federal Reserve (Fed).
Traders anticipate further reductions in the Fed’s benchmark rate, projecting a total decrease of 0.75 percentage points by the end of the year. Meanwhile, members of the institution believe that the rise in long-term U.S. bond yields and the price of short-term Treasury bills bolster the dollar, attracting foreign capital to these investments.
