Forex News: U.S. Dollar Rises Amid Hawkish Fed Policy Outlook

U.S. Dollar Rises Amid Hawkish Fed Policy Outlook

(RTTNews) - The U.S. dollar strengthened against most major currencies in the European session on Tuesday, as traders focus on the Federal Reserve's (Fed) probable intention to maintain higher interest rates for a longer period of time.

Any downward pressure from reducing geopolitical tensions between the US and Iran was effectively neutralized by this hawkish view.

According to the Federal Open Market Committee's (FOMC) Economic Projections report released last week, nine out of 19 policymakers anticipate a rate increase in 2026.

This forecast is strongly reflected in market pricing; the CME FedWatch tool shows an 85 percent chance of at least a 25-basis-point rate increase before the year is out. Investors are keeping a tight eye on Thursday's release of the Fed's favored inflation index, the May Personal Consumption Expenditure (PCE) Price Index, to determine the next moves for US monetary policy.

Despite some ongoing tension, US Vice President JD Vance stated today that discussions have made "great progress," according to some media reports. Iranian Foreign Minister Abbas Araghchi echoed the confidence, confirming that the Swiss meeting has produced "major progress."

Traders await S&P Global US Purchasing Managers Index (PMI) data due later in the day.

In the European trading today, the U.S. dollar rose to nearly a 1-year high of 1.1405 against the euro and a 7-month high of 0.8101 against the Swiss franc, from early lows of 1.1439 and 0.8078, respectively. If the greenback extends its uptrend, it is likely to find resistance around 1.12 against the euro and 0.82 against the franc

Against the pound, the greenback edged up to 1.3212 from an early low of 1.3250. The greenback may test resistance around the 1.31 region.

Looking ahead, U.S. ADP weekly employment data, U.S. Redbook report, U.S. S&P Global PMI data for June and U.S. Richmond Fed manufacturing index for June are slated for release in the New York session.

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