Dollar Strengthens on Rising Yields and Hawkish Fed Comments

The US dollar is on track to post its first back-to-back weekly gains since June as rising U.S. bond yields and firmer expectations of additional Federal Reserve rate increases support the currency.

Rising long-term Treasury yields have pushed benchmark rates to their highest level in over 20 years, giving the greenback an added boost. The dollar index has climbed more than 1% this week to a two-month high and is set for its first consecutive weekly gains since June.

The euro has dropped to a two-month low of $1.1370 and is on track for a third straight weekly decline, its worst losing streak since the end of 2025. Sterling is hovering near a three-month low of $1.3220 and is on course for its weakest weekly performance in four months.

Khoon Goh, head of Asia research at ANZ, said higher yields should support the dollar but lingering concerns about the U.S. fiscal position are limiting the currency's ability to extend gains.