Dollar Surges to Seven-Week High on Fed Rate Hike and Hawkish Outlook

The US dollar reached a seven-week high on Thursday after the Federal Reserve raised interest rates and signaled potential further increases in the coming months.

The decision, led by newly appointed Fed Chair Kevin Warsh, was seen as more hawkish than expected, prompting investors to reassess the monetary policy outlook towards tighter conditions.

The dollar strengthened alongside US Treasury yields, pushing the euro to $1.1456, near its seven-week low, and the yen hovered around 156.20 per dollar, close to its two-week low.

The market is currently pricing in a roughly 90% probability of another quarter-point US rate increase by the end of this year, according to CME's FedWatch Tool.