Dollar Firms to 100.84 as Yields Climb, Euro Near Two-Month Low

The US Dollar Index is at 100.84, up 0.11% in Tuesday's still-open New York session (the read is roughly three hours before the 5pm close). That's a pullback from Monday, when the index pushed above 101 to a near two-month high before easing into the close, as US-Iran tensions kept oil elevated. Today's move is modest against a jumpier tape elsewhere: the VIX is up 7.33% to 15.96, the S&P 500 is down 0.50%, the Nasdaq down 0.62%, and commodities are swinging hard — Brent crude off 6.40%, gold down 3.53%, silver down 4.70%.

The Fed funds target sits at 3.75-4.00% after a 25bp hike on September 16 (a 12-0 vote), the first hike since 2023. Most officials project at least one more hike this year — the live question is further increases, not cuts. As of Monday, CME FedWatch pricing pointed to another hike in October as the more likely outcome. Today's Treasury curve backs that framing: the 10-year yield is up 5.2bp to 5.236%, the 30-year up 6.0bp to 5.564%, and the 5-year up 5.2bp to 5.059%, while the 3-month bill eased 1.7bp to 4.053%. The 20+ Year Treasury ETF fell 0.92%.

EUR/USD: 1.1377, down 0.13% today, extending Monday's slide to a near two-month low; ECB President Lagarde told the European Parliament's ECON hearing there is 'higher inflation ahead but no signs yet that it is becoming embedded.' GBP/USD: 1.3267, up 0.16%, rebounding off last week's three-month low after BoE Deputy Governor Ramsden said Monday that inflation risks are increasingly tilted to the upside. USD/JPY: 157.26, essentially flat, after Monday's push toward 158; Japan's Mimura says markets should heed a 'very clear' warning on the yen. USD/CAD: 1.4167, up 0.20%, with new US tariffs on Canadian goods taking effect today.

EUR/USD trades at 1.1377, down 0.13% today, after Monday's session took it to about 1.1368 — a fourth straight losing session and its weakest level in almost two months. That run of losses points to a multi-week trend rather than a one-day move. The driver has been the dollar side: US-Iran tensions kept oil elevated Monday, keeping Treasury yields bid and the dollar firm. On the euro side, ECB President Lagarde told the European Parliament's ECON hearing that a measured policy response remains appropriate, flagging upside inflation risks and downside growth risks. Today brings the ECB/ESCB Legal Conference in Frankfurt, where Lagarde speaks again — the desk flags this as a legal/institutional event, not a policy signal — alongside Spanish flash CPI and an Italian 10-year bond auction.

Today's calendar: Australia's RBA delivers its Cash Rate decision at 14:30 Sydney time (forecast 4.60%, up from 4.35% previously), followed by the Rate Statement and a press conference. Europe: Spanish flash CPI y/y (forecast 4.7% vs. 4.3% previous), Buba President Nagel speaks, and ECB President Lagarde appears at the ECB/ESCB Legal Conference in Frankfurt. The UK publishes M4 money supply, mortgage approvals (forecast 57K vs. 56K previous) and net lending data. Bond supply: an Italian 10-year auction and a UK 10-year auction. Canada releases GDP m/m (forecast 0.1% vs. 0.3% previous) the same day new US tariffs on Canadian goods take effect. The US releases HPI m/m and the S&P/Case-Shiller 20-city home price index.