Dollar Strengthens as Fed Hike Bets Outweigh ECB Expectations

The US Dollar (USD) strengthened against its major counterparts on Monday, as Federal Reserve rate-hike bets overshadowed European Central Bank tightening expectations. The EUR/USD pair traded around 1.1368, down 0.20%, the lowest level since June.

The US-Iran stalemate has kept oil prices elevated, pushing up US Treasury yields to their highest level in over a decade at 5.27%. Markets now see a 70% chance of another Fed rate hike in October, according to CME FedWatch.

ECB President Christine Lagarde emphasized the ongoing uncertainty surrounding inflation and growth, stating that 'We still see upside risks to inflation and downside risks to growth.' Despite this, expectations for further ECB tightening have done little to support the Euro.