In September 2017, the Federal Reserve called a historic end to its quantitative easing program, a decision that increased the dollar index to 0.7 percent. The yield on the 10-year Treasury also rose, from about 2.24 percent prior to the announcement to 2.27 percent afterwards, while the policy-sensitive two-year yield jumped from 1.38 to 1.43 percent.

The Fed also started to consider further hikes in the U.S. interest rate. Coupled with a buoyant U.S. economy, this led to an increase in the value of the U.S. dollar vis-á-vis other currencies in January 2018. Explain why investors are rational when dumping other currencies and buying dollars.