Dollar Eases Off Seven-Week High Amid Rate Hike Fallout

The US dollar has reached a seven-week high against major currencies but is easing off slightly as foreign exchange desks reassess their portfolios following the Federal Reserve's hawkish rate increase.

The greenback, which tracks its value against a basket of six major currencies, held steady around 100.17 after advancing 0.7% in the prior session when the Fed voted unanimously to lift its benchmark policy rate by 25 basis points to 3.75%-4.00%, marking its first rate hike in three years.

Federal Reserve Chair Kevin Warsh's firm stance reassured markets that the Fed remains committed to anchoring energy-driven inflation expectations, with rate futures now discounting roughly a 90% probability of a follow-up quarter-point increase before year-end.

The yen is outperforming major currencies, advancing 0.3% as foreign exchange traders aggressively build in bets for a landmark policy shift from Tokyo, where the Bank of Japan is expected to raise interest rates on Friday by 25 basis points to 1.25%, marking a dramatic step away from decades of ultra-loose monetary settings.