Dollar Hits 17-Month High Against Euro Amid Rising Yields

The US dollar has reached its highest level against the euro in nearly two years, driven by a combination of factors including rising Treasury yields and concerns over inflation.

According to Reuters, the dollar rose to a 17-month high against the euro on Thursday, with the European currency falling below $1.123 for the first time since May 2025.

The surge in the dollar's value is attributed to higher yields in US government bonds, which have reached their highest level since 2002 at 5.272%.

Brian Daingerfield, head of G10 FX strategy at NatWest Markets, stated that 'higher yields have been driven by a confluence of factors, particularly concern about fiscal policy and continued concern around energy prices and higher inflation.'

The dollar has also gained ground against other major currencies, including the yen and Swiss franc, while the Australian dollar fell to a two-month low after domestic inflation came in below forecasts.