The US dollar extended gains to reach a fresh 13-month high against a basket of major currencies on Wednesday, as investors sought shelter from a tech stock selloff and prepared for rate hikes from the Federal Reserve.Stock market volatility continued after a broad selloff of technology and semiconductor sectors dragged global shares lower, sparking safe-haven demand for the dollar and bonds.
Meanwhile, expectations of a US rate hike continued to build with Fed officials sounding increasingly hawkish as the economy remains strong. Markets are pricing in a 36% chance of a hike at the July meeting, up from 8.5% a week ago, according to CME FedWatch. For September, the chance of a rate rise has risen above 70% from 29.1%.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, climbed to a high of 101.51, the strongest level since May 2025.
"The US dollar is still the preferred safe haven," said Ray Attrill, head of FX strategy at National Australia Bank.
"Obviously the momentum is on its side at the moment, but I think there is a lot priced in," he said. "We'll have to see a correction in risk sentiment, one that's broader rather than just the tech sector, or the market further ratcheting up its expectations for hikes, before the dollar can go very much higher from here."
