The dollar rose against major currencies as worries over the U.S. fiscal cliff continued to weigh on investor sentiment. Negotiations in Washington remain stalled, increasing the likelihood of automatic tax increases and spending cuts taking effect.

Market Impact

The uncertainty surrounding the fiscal cliff has led investors to seek refuge in the dollar, traditionally viewed as a safe-haven asset. The dollar index, which measures the greenback against a basket of six major currencies, climbed 0.3% to 80.50.

Analyst Commentary

“The fiscal cliff is the main driver of dollar strength,” said a currency strategist at a major investment bank. “Until there is a resolution, we expect the dollar to remain supported.”

Potential Outcomes

If lawmakers fail to reach a deal, the U.S. economy could face a recession. A deal would likely boost risk appetite and weaken the dollar.

Other Currencies

• The euro fell against the dollar, trading at $1.32.
• The British pound also weakened, trading at $1.60.
• The Japanese yen remained relatively stable.