The US dollar goes up against the euro, yen, and pound sterling in trading on Monday as the market awaits the Federal Reserve (Fed) meeting. 

Most experts believe the Fed will raise its benchmark interest rate by 75 basis points (bps) at the end of its September 20-21 meeting because August inflation statistics showed a slower-than-expected slowdown in consumer price growth in the United States. This contributes to the US dollar going up. 

The euro, yen and pound to the dollar are at multi-year lows amid a sharp tightening of monetary policy by the Fed, which is encouraging global investors to invest in U.S. assets, whose yields are rising along with the rise in the prime rate.

Does the dollar go up in prices and what is really going on?

The unfavorable economic outlook in other regions is supporting the dollar. For example, Europe is facing an energy crisis, while in China the economic growth has been severely weakened by tight quarantine restrictions as well as a downturn in the real estate market.

The yuan, however, is unlikely to weaken sharply against the dollar before the Chinese Communist Party’s annual event scheduled for mid-October, experts at Goldman Sachs Group Inc. said. “The authorities would prefer stability ahead of a key political event,” Goldman said in a review. At the same time, analysts expect the slow weakening of the yuan to continue in the near term amid a general strengthening of the dollar.

The calculated ICE index that shows the dollar trend against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and the Swedish krona) added 0.17% on Monday, while the broader WSJ Dollar Index gained 0.28%.

The ICE Dollar Index is up more than 14% since the start of 2022 and could show its biggest gain this year since it began calculating it in 1985; Dow Jones notes.

We previously reported on why the dollar is so strong right now.