The U.S. dollar strengthened against major currencies on Monday amid speculation of advancing U.S.-China trade negotiations, with the ICE Dollar Index rising 0.16% to 96.678. Traders anticipated progress in resolving the trade dispute between the world's two largest economies, which has influenced global currency markets.
U.S. bond yields rose, with the 10-year Treasury benchmark hitting a one-month high last week. The yield gap between U.S. and German 10-year notes widened to 257 basis points, reflecting divergent monetary policies.
A source familiar with discussions indicated U.S. and Chinese officials were nearing an agreement to reduce tariffs on $200 billion in Chinese imports, though specifics remained unresolved. TD Securities' Mazen Issa noted the potential deal could ease growth pressures but warned it might not offset slowing activity in Europe and emerging markets.
The Chinese yuan edged up 0.08% to 6.7097 against the dollar in offshore trade, approaching a 7.5-month high. The euro fell 0.33% to 1.1331, while the dollar hovered near a 10-week high of 111.73 yen.
Analysts speculated European Central Bank policy decisions could further impact currency dynamics. Meanwhile, U.S. President Donald Trump criticized Federal Reserve Chair Jerome Powell, blaming the central bank for an overvalued dollar that harms exports.
Commodity Futures Trading Commission data showed speculators increased bullish dollar positions to a four-week high in mid-February, reflecting growing confidence in the currency's outlook.
