Dollar Pauses Near Two-Week High Amid Warsh's Hawkish Rhetoric

The US dollar has paused near its two-week high after three consecutive sessions of gains. This comes as currency markets digest Federal Reserve Chair Kevin Warsh's hawkish address at the Jackson Hole symposium and prepare for a data-heavy week.

Warsh's speech sparked a sharp upward re-pricing of US interest rate expectations, with Fed funds futures now implying a nearly 60% probability of a 25-basis-point rate hike at the Fed's September 16 meeting. This is up sharply from 35% prior to Warsh's address.

The greenback's underlying strength reflects persistent inflation pressures, surging crude oil prices, and explicit central bank guidance. The dollar has gained momentum, with global benchmark Brent crude jumping 2.7% past $90.50 a barrel following direct US military strikes on Iranian rocket launchers.