The US dollar remained firm near a multi-month high on Tuesday, supported by elevated Treasury yields and renewed political uncertainty in Europe.
Ten- and 30-year yields remain close to multi-decade highs, while the jump in the ISM services prices-paid index to its highest level in more than four years reinforced concerns over persistent inflation.
That has helped preserve expectations of several interest rate increases through mid-2027 and kept the dollar supported.
The currency’s strength remains sustained by the broader policy path, although markets assign only around a 21% probability to an immediate hike. Recent Fed commentary has also been mixed. Dallas Fed President Lorie Logan argued that interest rates may need to rise by at least another 50 basis points, while others highlighted less urgency in raising rates.
Europe is providing another tailwind. Concerns over French public finances and political deadlock in Paris, alongside uncertainty surrounding Spain’s snap election on November 29, have weighed on the euro and strengthened the dollar’s appeal.
Wednesday’s FOMC minutes will provide the next major test. With little tightening priced for the upcoming meeting, evidence of broad support for further hikes could trigger a repricing and extend the dollar’s gains. Conversely, signs of disagreement over the timing or need for additional tightening could weaken the broader multi-hike path and weigh on the currency. In the meantime, today’s ADP employment update and Fed commentary could generate some volatility.
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