The US dollar remained near its highest level in more than two months on Thursday, June 18, 2026, as investors increasingly expect the Federal Reserve to maintain a hawkish stance and potentially raise interest rates later this year.
The stronger dollar continued to weigh on major global currencies, particularly the Japanese yen, which weakened toward levels that market participants believe could prompt intervention from Japanese authorities.
At its latest policy meeting, the Federal Reserve kept its benchmark interest rate unchanged at 3.50%–3.75%. However, newly appointed Fed Chair Kevin Warsh emphasized the central bank’s commitment to controlling inflation and conducting a comprehensive review of monetary policy.
Recent projections indicate that nearly half of Federal Reserve officials expect at least one additional rate hike before the end of 2026, reflecting ongoing concerns about persistent inflationary pressures.
According to CME FedWatch data, financial markets currently assign an 83% probability that the Fed will raise interest rates in December 2026. Strong US retail sales data has further reinforced expectations that monetary policy could remain restrictive for longer.
Market sentiment was also influenced by developments in the Middle East. US President Donald Trump stated that military action against Iran could be reconsidered if Tehran is perceived to violate the current ceasefire agreement. These comments helped support oil prices and contributed to continued strength in the US dollar.
In the foreign exchange market, the euro edged slightly higher to US$1.1511 after previously touching its lowest level in two months. The British pound also gained modestly, trading at US$1.3318.
Risk-sensitive currencies performed slightly better, with the Australian dollar and New Zealand dollar each rising approximately 0.2% to US$0.7025 and US$0.5780 respectively.
Meanwhile, the US Dollar Index (DXY), which measures the greenback against a basket of major currencies including the euro and yen, remained relatively stable at 100.31. During the previous trading session, the index surged 0.85%, marking its strongest daily gain since early March and reaching its highest level since March 31, 2026.
Gavin Friend, Senior Market Strategist at National Australia Bank (NAB), noted that the dollar’s upward momentum could continue.
He suggested that markets may still be adjusting to the recent shift in sentiment, adding that the US dollar could be entering a new phase of sustained strength.
On the other hand, the Japanese yen continued to weaken, falling to 160.76 per US dollar, its lowest level since 2024. The exchange rate remains close to the 160-yen threshold, a level widely viewed as a psychological boundary that could trigger intervention from Japanese authorities.
Investors are also awaiting the outcome of the Bank of England’s latest policy meeting. The central bank is expected to leave interest rates unchanged at 3.75% while assessing the potential impact of the temporary US-Iran ceasefire on global inflation trends.
Managing Foreign Currency During Market Volatility
Global events, central bank decisions, and geopolitical developments can significantly influence exchange rates and currency markets worldwide.
For travelers, expatriates, and international business visitors in Bali, staying informed about these movements can help when planning currency exchanges and managing travel expenses.
Cash X Change provides licensed foreign currency exchange services with transparent rates and professional assistance for customers looking to convert major international currencies into Indonesian Rupiah (IDR).
For those who need to receive money from abroad, send international transfers, or access cash withdrawal services, Ditransferin also offers convenient Western Union services to help meet your financial needs while in Indonesia.
Before visiting, we recommend checking the latest exchange rates directly through our official channels and preparing valid identification documents where required under Indonesian regulations.
Source: Kontan & Reuters