Dollar steadies near record highs amid Fed rate hike expectations

The U.S. dollar index rose marginally to 99.69 on Tuesday, marking its sixth consecutive day of gains and maintaining its position near its highest level in over a year. The greenback’s strength reflects expectations that the Federal Open Market Committee (FOMC) will raise the federal funds rate by 25 basis points, marking the first hike since July 2023 and the first policy move since a quarter-point cut in December 2023. The move would bring the rate closer to levels last seen in 2022, amid persistent inflation pressures and elevated Treasury yields, which hit new 24-year highs on Monday, with the 10-year yield reaching its highest since April 2007 at 5.019 percent. The 30-year yield also reached a fresh peak, underscoring market expectations of sustained monetary tightening.