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The dollar is heading for weekly gains on Friday, as rising Treasury bond yields and increasing expectations that the Federal Reserve (the US central bank) will raise interest rates again have kept the US currency close to its highest levels in several months.
The strength of the dollar pushed the euro to its lowest level in two months at $1.1370 and led to its third weekly decline, the worst losing streak since the end of 2025.
The British pound remained near its lowest level in three months at $1.3220 and is heading for its worst weekly performance in four months.
Markets quickly and strongly adjusted their expectations for interest rates after the US central bank tightened its monetary policy last week, while strong economic data and new concerns about energy supplies further reinforced this conviction.
The currency also received support from a wave of bond selling that pushed long-term US Treasury bond yields to their highest levels in over 20 years.
The dollar index, which measures the performance of the US currency against a basket of other currencies, rose more than 1% this week to its highest level in two months.
Oil prices jumped more than 3% on Thursday to their highest level in a week after a rocket attack by the Houthis on Saudi Arabia exacerbated fears of supply disruptions, increasing the likelihood of rising inflation.
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