Dollar Soars as Bond Markets Implode

The US dollar continued its upward trajectory on Monday, fueled by the slump in bond markets and rising yields. The recent hawkish Federal Reserve rate hike has led to an increase in yield spreads between the US and other countries, which continued today.

The surge in the greenback was also supported by strong US macro data and hawkish Fed commentary. As a result, major currency pairs such as EUR/USD and GBP/USD fell, while USD/JPY and USD/CHF rose.

The British pound has been particularly affected by the dovish Bank of England rate decision, leading to a bearish forecast for the GBP/USD exchange rate. The technical damage could weigh on the pair in the short term, with key levels around 1.3270 and 1.3140 being targeted.