US Dollar Stable Near Multi-Year High, Fed Bets Rise

(MENAFN- MENAFNEditorial) The US dollar held firm on Thursday, near its highest level since April 2025 as short-dated Treasury yields rose further. The latter remain supported by stronger monetary policy tightening expectations.
An upside surprise in consumer prices has led markets to fully price in a 25-basis-point rate hike in December and increase the expected number of hikes through mid-2027. Hawkish remarks from Fed officials have reinforced that repricing, lifting short-dated yields to weekly highs.
Traders could remain cautious as the USDJPY pair nears the 160 level, as they consider intervention risks. Against the euro, the dollar is near its highest since May 2025, with political uncertainty in France and Spain weighing on the single currency, although expectations of an ECB interest rate hike may offer some support.
In the UK, GDP grew in line with expectations, and Bank of England officials Clare Lombardelli and Megan Greene signalled openness to further tightening if inflation persists, painting a more bullish outlook for the pound against the dollar.
Initial jobless claims today could move bond and forex markets. Tomorro’’s PPI data will also affect monetary policy expectations. A hotter reading could lift short-dated yields and extend dollar gains, while softer data or Fed pushback against a half-point move could trim interest rate expectations. In the Middle East, renewed tensions could boost oil, revive inflation fears and push both yields and the dollar higher, while easing tensions could weigh on both.

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