DXY Surges on Oil Price Spike, Fed Rate Hike Bets Rise

The US Dollar Index (DXY) has extended its gains for the second consecutive day, trading around 101.20 during Asian hours on Tuesday.

The surge in oil prices, driven by ongoing uncertainty surrounding US-Iran negotiations, has bolstered expectations of another Federal Reserve rate hike to combat inflation.

Rising Treasury yields have pushed to fresh multi-year highs, with both the 10- and 30-year yields climbing above 5%.

The CME FedWatch Tool shows money markets are currently pricing in a roughly 70% probability of another Federal Reserve rate increase in October.