Investing.com - The dollar was holding near almost 14-year highs against a basket of the other major currencies on Tuesday after falls on Monday as traders took profits in the wake of 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 at 101.02, holding below 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 since the outcome of the U.S. presidential election amid expectations that President-elect Trump’s plans 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 the U.S. central bank will almost certainly raise interest rates at its December 13-14 meeting.
Fed Chair Janet Yellen late last week reiterated that a rate hike “could well become appropriate relatively soon.”
Investors have assigned a 100% chance of a rate hike at the Fed's December meeting; according to federal funds futures tracked Investing.com's Fed Rate Monitor Tool.
Expectations for higher interest rates typically boost the dollar by making it more attractive to yield seeking investors.
The dollar edged higher against the yen, with USD/JPY at 110.92, after touching overnight lows of 110.28. The pair set an almost six-month high of 111.35 on Monday, before pulling back.
The euro dipped, with EUR/USD edging down to 1.0617, still holding above Friday’s 11-month lows of 1.0568.
The pound also edged lower, with GBP/USD easing to 1.2474.
Sterling ended Monday’s session with gains of 1.3% as investors continued to assess what form Britain's exit from the European Union will take.