Dollar rose in European trade on Monday against a basket of major rivals, extending gains for a second session and scaling a three-month high as US 10-year treasury yields rally.
The gains came after new bullish remarks by Fed Chair Jerome Powell, which hurt the odds of an early US interest rate cut in March or May.
The Index
The dollar index rose 0.3% to 104.28, the highest since November 17, after rallying 0.9% on Friday, the best profit in 2024 following stellar US labor data.
The Index rallied 0.5% last week, the fifth weekly profit in a row, and the longest such streak of weekly gains since July 2023.
US Yields
US 10-year treasury yields rallied 1.9% on Monday, underpinning the dollar further,
The gains came after an interview by Fed Chair Jerome Powell, which asserted the bullish stance taken by the Fed this year.
Powell
US stock indices settle near record highs ahead of Fed meeting
In a wide-ranging interview with 60 Minutes on CBS broadcast yesterday in the US, Fed Chair Jerome Powell said the Fed will move cautiously about rate cuts.
He said the Fed requires more confidence in achieving inflation targets before taking the step of cutting rates.
The world’s largest central bank governor said that policy tightening is likely to cause some pain to US economy.
However, the Fed will move much slower than markets expectations when it comes to rate cuts.
He once again added that he doesn’t expect the Fed to cut rates in March, given how strong the US economic performance has been so far.
US Rates
Following Federal Reserve Governor Jerome Powell’s bullish remarks recently dismissing the possibility of a March rate cut, the odds of such a move tumbled to just 17.5%.
The odds of a May Fed interest rate also slipped from 60% to 57.5%.
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