Dollar Bounces Back as Hawkish Fed Message Weighs on Risk Sentiment

The US Dollar has bounced back after recent losses, but its recovery is far from certain. Markets began the week on a cautious note, weighed down by higher US yields and renewed geopolitical tensions.

Fed Chair Warsh delivered a hawkish message on Friday, pushing expectations for a September rate hike to nearly 60%. This sent the US 2-year yield above 4.3%, further solidifying inflation concerns.

Crude oil prices have risen due to fresh tensions between the US and Iran, adding fuel to the fire of inflation worries. Stocks are under pressure, while gold has turned south after a sharp sell-off on Friday.

This week's key events will be the release of US ISM data and the NFP report on Friday. These reports could have a significant impact on the next Fed decision and the value of the US Dollar.