Rising U.S. Treasury yields have further boosted the greenback, while currencies like the euro and yen have experienced losses. The Fed’s next meeting in November is expected to bring more clarity on the pace of future rate cuts. Many market participants now believe the Fed may pause rate cuts altogether if inflation remains manageable and the labor market continues to perform well.
This change in market sentiment has caused significant volatility in major currency pairs. For instance, the EUR/USD pair is under pressure, trading near $1.082, while the USD/JPY pair has seen heightened volatility, with the yen slipping to a three-month low.
What to Watch For: The upcoming U.S. Non-Farm Payrolls report will be critical for the dollar’s direction in the short term. A strong report could push the greenback even higher.