Investing.com – The U.S. dollar strengthened on Monday, maintaining recent strength as the U.S. presidential election approaches and polls point to an increasing likelihood of former President Donald Trump winning.

At 04:30 ET (08:30 GMT), the dollar index, which tracks the dollar against a basket of six other currencies, was up 0.2% at 103,462, after posting a gain of about 0.6% last week.

Dollar strengthened by Trump’s confidence

The dollar remained near its highest levels in more than two months, supported by growing confidence that U.S. interest rates will fall at a slower pace than initially expected, especially as the latest data showed the U.S. economy remains relatively fit.

Investors shown largely reinforced the Federal Reserve’s 25-basis-point rate cut in November.

The dollar is also supported by increased expectations that Donald Trump will defeat Kamala Harris in the 2024 presidential election, which will take place in less than two weeks.

Trump’s proposed tariff and tax policies are believed to likely keep U.S. interest rates high and hurt the currencies of trading partners.

“Forex markets appear to be positioning for a Trump victory in next month’s US presidential election. October seems to be a good month for Donald Trump in the polls and the dollar is widely auctioned,” ING analysts said in a note.

Euro affected by delicate German PPI

In Europe, down 0.1% to 1.0850, after producer prices in Germany fell more than expected in September, falling 1.4% year-on-year instead of the expected 1.0%.

The European Central Bank is likely to cut its key interest rate to a “natural” level of between 2% and 3%, but may have to cut it further if the decline in inflation continues, ECB policymaker Gediminas Simkus said on Monday.

“If disinflation processes persist… it is possible that interest rates will be lower than the natural level,” Simkus, president of the Lithuanian central bank, told reporters in Vilnius.

fell 0.2% to 1.3022 after data showed asking prices for British homes rose just 0.3% in October, well below average, with a monthly rise of 1.3%, according to the property portal Rightmove (OTC:).

This, along with a surprise decline in services inflation last week, points to further interest rate cuts by the Bank of England in the coming months as the central bank tries to stimulate the UK economy.

The yuan falls after the PBOC cuts interest rates

rose 0.2% to 7.1120 after China’s central bank cut its benchmark lending rate by 25 basis points, with Monday’s cut coming amid a series of recent stimulus measures from Beijing.

China announced its most aggressive round of stimulus measures last month, unveiling monetary and fiscal measures to support sluggish growth.

rose 0.3% to 149.91 but remained below 150 after briefly breaching that key level last week for the first time since early August.