US Dollar Climbs As Federal Reserve Tightens Its Monetary Policy



Currency traders at websites like eToro have seen the US dollar climb, as the Federal Reserve looks to become the first of the world’s major central banks to tighten its monetary policy. The greenback made headway against both the euro and the Japanese yen during Monday’s trading sessions, climbing by 0.2 per cent against the euro and 0.8 per cent against the yen.

Ahead of Federal Reserve chief Ben Bernanke’s congressional testimony on Wednesday and Thursday, investors are beginning to speculate that the dollar will grow in strength, as they believe that the US will finally step away from the current ultra-loose policies that have been in place for the last couple of years.

Other help for the US dollar came from a drop in German exports and France losing its ‘Triple A’ credit score. These two events have allowed the once ailing US dollar to make grounds against its European counterpart. Along with the eurozone and its current economic woes, the Japanese yen also struggled as many believe that Japan will continue with its quantitative easing measures, stopping investors from buying up the currency.

For traders at eToro and other online currency trading sites, the possibility of tightened monetary policies in the US may offer some inviting positions, as traders begin to buy the currently unfavourable US dollar ahead of other currencies.

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