On Tuesday, the dollar was trading close to the nearly 14-year high against a basket of other major currencies, after falling on Monday, as traders took profits on the basis of the US currency for the longest rally in the past four years.
The USD Index, which tracks the greenback against a trade-weighted basket of six major rivals, is trading at 100.92, below the 13.5-year high at 101.54 reached on Friday.
Before the fall of the dollar on Monday, it showed growth during ten consecutive sessions, which became the maximum duration recovery period from May 2012.
The US currency got support after the US presidential election, following the jump in government bond yields in the US amid expectations that the Trump administration would increase budget spending and tax cuts, which, in turn, will contribute to the acceleration of economic growth and inflation.
Accelerating economic growth and inflation will allow the Fed to continue tightening monetary policy.
Dollar rally was also triggered by rising expectations that the US central bank will increase rates at its meeting on December 13-14.
Late last week, the chairman of the Federal Reserve Board of Governors, Janet Yellen, said that the rate increase “is expedient in the near future."
According to forecasts, it is estimated that the probability of an increase in US interest rates in December is 100%.
The expectations of higher interest rates tend to promote the growth of the dollar, which makes the US currency more attractive to investors seeking income.
The US dollar rose against the yen: USD/JPY pair is at 110.92 after touching 110.72 low yesterday. On Monday, the pair has reached almost six-month high 111.35, before stepping back.
The euro rose slightly: EUR/USD is at 1.0638, recovering from an 11-month low of 1.0568 on Friday.
The pound also fell: GBP/USD has weakened by 0.32% to 1.2448.
The British currency completed yesterday's session with a growth by 1.3%, as investors continue to assess the way in which the UK will leave the European Union.