Commodity boost

The US economy is still suffering from the credit crisis but analysts say the deteriorating outlook elsewhere in the world has buoyed the currency’s standing.

The falling price of commodities, that are priced in dollars, has also helped the US currency. Investors had bought oil and gold to protect against dollar weakness but they are now unwinding those positions.

The euro has been further undermined by military conflict in Georgia that could disrupt European markets.

However, analysts cautioned that the dollar’s rally might not be sustainable.

"The scope for a much faster recovery in the dollar is still limited by relatively poor economic fundamentals in the US," said Julian Jessop, chief international economist at Capital Economics.