The US dollar strengthened against a basket of major currencies on Monday, benefiting from its status as a safe-haven asset amid rising geopolitical tensions and uncertainty in global financial markets. The dollar index, which measures the greenback's performance against six major peers, rose to a two-week high.
The currency was supported by robust economic data in the US, including stronger-than-expected retail sales and a resilient labor market. This has reinforced the view that the Federal Reserve will maintain a hawkish stance, keeping interest rates elevated to combat inflation.
In contrast, the euro and the British pound weakened as economic data from Europe painted a gloomier picture. The eurozone economy is struggling with stagnant growth and high inflation, while the UK faces challenges related to its exit from the European Union.
Currency analysts note that the dollar's strength is a double-edged sword. While it boosts the purchasing power of US consumers, it makes American exports more expensive, potentially widening the trade deficit and hurting multinational corporations' earnings.