Dollar jumps to near two-month high on Fed outlook, oil climb

The US dollar surged to its highest level in nearly two months on Wednesday, buoyed by expectations of more interest rate hikes from the Federal Reserve and a jump in oil prices. Investors are pricing in a rate hike cycle from the central bank following its recent hike, with several Fed officials suggesting further increases if inflation remains stubborn.

Federal Reserve Governor Michael Barr emphasized that the US central bank recalibrated short-term borrowing costs last week to curb inflation and likely needs additional rate hikes. The dollar index rose 0.54% to 101.09, its highest since July, as hopes of diplomacy resolving the ongoing Middle East conflict faded, sending oil prices higher. The euro fell 0.52% to $1.1386, marking its third consecutive daily decline.