Dollar Slumps as US Treasury Boosts Liquidity

The US dollar index (DXY00) plummeted to a 2.5-month low, falling by 0.76%, as the Treasury boosted liquidity and announced plans to increase buybacks of long-dated bonds.

Lower T-note yields also contributed to the dollar's weakness, as interest rate differentials narrowed.

The euro (EUR/USD) surged to a 2.5-month high, rising by 0.77%, as the US Treasury's actions boosted liquidity and investment in the eurozone economy.

In Japan, the yen (USDJPY) rallied to a 1-week high against the dollar, supported by lower T-note yields and increased expectations of a BOJ rate hike after Prime Minister Sanae Takaichi's government expressed support for a rate increase.