Dollar Reaches Two-Month High as Euro, Pound Fall on Energy Worries

The US dollar has reached a two-month high, supported by rising Treasury yields. This development comes despite a quiet shift in rate expectations that had calmed currency markets.

However, bond yields and energy-price fears are pulling investors in different directions. The war in the Middle East is adding to global inflationary pressures, putting further pressure on currency markets.

The euro has fallen to $1.1330, its biggest monthly decline since July 2025, at nearly 2.5%. The pound sterling was little changed at $1.3264 after falling 2.1% over the previous month.

Ray Attrill, head of foreign-exchange strategy at National Australia Bank, noted that the US personal consumption expenditures price index data offered some grounds for optimism. He said the market was justified in scaling back expectations of another Fed rate hike, but that did not rule out further monetary tightening.