The US Dollar Index (DXY) rose to its highest level in two weeks on Thursday after economic data showed that the labor market remained stable, giving the Federal Reserve the opportunity to continue raising interest rates.

The number of initial weekly jobless claims fell by 26,000 to 239,000, seasonally adjusted. This was the largest drop in 20 months and was below the 265,000 forecast by economists surveyed by Reuters.

Additionally, the Department of Commerce revised the first-quarter GDP estimate to 2%, up from the previously reported 1.3% in May. This also exceeded the earlier forecast of 1.4%.

Federal Reserve Chairman Jerome Powell, speaking at an event hosted by the Spanish central bank in Madrid on Thursday, indicated that the central bank is likely to continue its interest rate hike policy following a pause earlier this month.

Quant Insight's Head of Analytics, Huw Roberts, said, "For now, the economy is proving resilient in the face of all the tightening we've seen, and he advises the Fed and others to keep going."

On Wednesday, Powell mentioned in a meeting with the European Central Bank that he doesn't see inflation returning to the Fed's 2% target until at least 2025.

Regarding the statement from Federal Reserve Atlanta President Raphael Bostic, who said the Fed should raise rates if price growth deviates from the target or inflation expectations begin moving in a "difficult" way, this indicates a tendency to take actions to maintain price stability.

Similar statements have been supported by other central bank leaders, such as ECB President Christine Lagarde and Bank of England Governor Andrew Bailey. They also argue that further interest rate hikes are necessary.

However, it's worth noting that Bank of Japan (BOJ) Governor Kazuo Ueda does not fully agree with this view. The BOJ may have a different approach to interest rate and inflation policies.

Recent data shows that inflation in Germany rose significantly or higher than expected in June, ending the stable decline seen since the beginning of the year. In contrast, inflation in Spain and Italy is slowing down.

Roberts commented that the latest inflation figures show rigidity, at least at the core level if not the headline level. This is also true across Europe. He also pointed out that core inflation in Spain and Germany indicates ongoing uncertainty in central banks.

Quarter-end and month-end positioning by investors could also influence price action. This typically happens as investors evaluate their portfolios and make adjustments, which can impact the demand and supply of financial assets.

Currently, the US Dollar Index has risen by 0.35% to 103.310, after previously reaching 103.44. This is the highest level since June 13.

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