Dollar Strengthens as Oil Prices Surge to Four-Month High

The US dollar strengthened on Tuesday as oil prices surged to over $105 per barrel, pushing Treasury yields to their highest since 2007.

Benchmark US 10-year Treasury yields rose by 4.1 basis points to 5.004%, while the euro slipped 0.1% against the dollar, hovering near its lowest level in a month.

The market now sees a Federal Reserve interest rate hike on Wednesday as almost certain, with CME's FedWatch tool pricing in a more than 92% chance of an increase.

FX strategist Francesco Pesole said that if the Fed decides to hold rates at this stage, it can lead to unwanted turmoil and strengthen the dollar further.