Investing.com – The US dollar rose slightly on Thursday, consolidating after recent volatility, while the euro continued to show softness as the situation in Eastern Europe became increasingly tense.

At 05:10 ET (10:10 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.1% higher at 106.690, extending gains from the previous session and remaining close to last week’s high.

The dollar is consolidating near the highs

The dollar may have dropped slightly on Thursday, but demand remains as relations between Russia and the West remain extremely tense as Ukraine has used US and British missiles to strike deep into Russian territory.

The U.S. currency was also boosted by Donald Trump’s victory in the presidential election, with investors examining policies aimed at large fiscal spending, higher tariffs and tighter immigration, measures that could support inflation and potentially snail-paced Federal Reserve easing.

“DXY remains profitable and it’s easy to see why. “U.S. interest rates are priced slightly higher again as the market moves away from pricing in the December Fed rate cut,” ING analysts wrote in a note. “Now it is only valued at 8 basis points,” he added.

Investors will be able to review the data later in the session, and several Federal Reserve officials will also make appearances in the coming days.

The euro is heading further down

In Europe, shares fell 0.3% to 1.0516, after falling 0.5% on Wednesday, back to last week’s low of $1.0496, the weakest against the dollar since October 2023.

“EUR/USD appears to have been hit this week by events in Ukraine,” ING noted. “The war is undergoing a period of escalation as both sides seek to gain the upper hand ahead of potential ceasefire discussions early next year. The fact that the Biden administration will provide more support before the end of the year warns of a more aggressive response from Russia – a situation that is weighing on European currencies.”

The faint economic climate in Europe combined with the potential for a trade war with the recent US administration led by Trump is also significant.

“The balance of risks to economic growth and inflation… is shifting downwards and possible US tariffs are not expected to significantly change the inflation outlook in Europe,” ECB policymaker Francois Villeroy de Galhau said on Thursday in a speech in Tokyo.

fell 0.2% to 1.2630 after data released earlier on Thursday showed Britain borrowed more than expected in October.

According to the Office for National Statistics, it was £17.4 billion in October alone, the second highest amount of borrowing in October since records began in 1993.

Yen benefits from Ueda’s comments

fell 0.7% to 154.38, with the Japanese yen gaining strength after Bank of Japan Governor Kazuo Ueda said the central bank would “seriously” take changes in currency exchange rates into account when making economic and price forecasts.

He noted that there is still a month left until the BOJ’s next policy meeting in December, adding that there will be more information to digest by then.

fell 0.1% to 7.2415, but the yuan remained near four-month lows, pressured by potential trade headwinds from a Trump presidency.