US Dollar Strength Survives Softer Fed Expectations

The US dollar index (DXY) held near its 17-month high of around 102.00 on Friday, marking its third consecutive weekly gain.

This strength is remarkable given that expectations for an immediate Federal Reserve rate hike have retreated to about 25-28%, down from 70% a week ago.

Despite the reduced likelihood of a near-term interest rate increase, the dollar's advance this week stands at 1%. The 10-year Treasury yield remains around 5.25%, having briefly touched 5.34%, its highest level since 2002.

The euro's decline provides additional support for the dollar. French government bonds have faced pressure due to concerns over the country's fiscal position, and the euro lost 2.5% in September.