Dollar Hits 18-Month High as Euro Faces Multiple Pressures

The US dollar has reached an 18-month high after the Treasury yield hit its highest level since 2002. This surge in yields, combined with hawkish Federal Reserve commentary, is drawing capital towards the dollar.

The euro's decline against the dollar is not solely driven by dollar strength, as it has also lost ground to the Swiss franc and Japanese yen, which carry no dollar exposure.

French bond stress is adding a fiscal premium to the euro, with investors demanding higher yields due to concerns over the country's budget and presidential election. Energy prices are also contributing to inflation in the euro area, further pressuring the currency.