The dollar index traded near the 100-point level on Thursday, extending a rebound from recent lows as the Federal Reserve’s increasingly cautious posture supported the US currency.
The 10-year Treasury yield climbed toward the upper end of its recent range, reflecting receding interest rate cut expectations following the Fed’s economic projections and the Chair’s comments.
Escalating tensions in the Middle East remain a key market force, with continued disruptions to regional energy infrastructure pushing oil prices higher and amplifying inflation concerns.
Higher energy costs could continue to limit the Fed’s ability to ease monetary policy. The Fed held its rates steady while revising its inflation projections upward. As a result, expectations have shifted toward no cuts this year, lending additional support to both yields and the dollar.
Attention now shifts to the weekly jobless claims data later today, which could affect sentiment to a certain extent. A weaker labour market reading might weigh on yields, although elevated oil prices could continue to draw attention. Conversely, lower claims could support a more cautious rate outlook and sustain the upward trajectory for yields and the dollar.
