Investing.com - The dollar was holding near almost 14-year highs against a basket of currencies on Wednesday as investors took a breather following the greenback’s longest rally in more than four years.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 100.98. The index was holding above Tuesday’s low of 100.71 and was still close to the 13-and-a-half year high of 101.54 set on Friday.
Before falling on Monday the greenback had risen for 10 straight sessions, its longest winning streak since May 2012.
The dollar has climbed amid expectations that plans by the Trump administration to ramp up fiscal spending and cut taxes will spur economic growth and inflation.
Faster growth would spark inflation, which in turn would prompt the Federal Reserve to tighten monetary policy a faster rate than had previously been expected.
The dollar rally has also been boosted by bets that a U.S. interest rate hike in December is now a near-certainty.
Data on Tuesday showing that U.S. existing home sales rose in October to their highest level in more than nine years underpinned dollar demand.
According to Investing.com's Fed Rate Monitor Tool, odds for a rate hike at the Fed's December 13-14 meeting are at 95.4%.
Expectations for higher interest rates typically boost the dollar by making it more attractive to yield seeking investors.
The dollar dipped against the yen, with USD/JPY easing to 110.96, still not far from the almost six-month high of 111.35 set on Monday.
The euro was fractionally higher, with EUR/USD edging up to 1.0633, having recovered from Friday’s 11-month lows of 1.0568.
The pound dipped, with GBP/USD at 1.2410 ahead of the UK government’s autumn budget statement, which was likely to forecast a surge in borrowing as Britain prepares to exit the European Union.