US Treasury Official Reassures Markets on Dollar Strength

The US dollar saw a significant recovery, appreciating against seven of the ten major global currencies. This rebound followed comments from US Treasury Secretary Scott Bessent, who affirmed the administration's commitment to a strong dollar policy. The gains helped to reverse some of the sharp losses accumulated over the preceding four sessions, which had been influenced by President Donald Trump's remarks suggesting comfort with the currency's decline.

Adding to market stability, the Federal Reserve announced its decision to maintain current policy rates, citing improvements in the economy. Despite the midweek recovery, the dollar finished the week approximately 1% lower. Factors contributing to its earlier weakness included speculation about potential Japanese currency market intervention and broader investor concerns stemming from unpredictable US policymaking, including trade policies and fiscal outlooks.

Analysts remain divided on the dollar's longer-term trajectory. Some warned of a potential extended slump, citing previous significant declines and market metrics indicating increased investor demand for protection against a weaker greenback. The coming days will be crucial in determining whether this recent rally represents a temporary respite or the start of a new downward trend for the US currency.