Robert J. Williams 
The US dollar held near a two-month high on Tuesday, 29 September 2026, as Treasury yields surged and Brent crude topped $107 a barrel, Reuters reported. The dollar index edged up to 101.27 in Asian trading and is on course for a 1.8% gain in September, its best month since June. Traders are holding back from bigger bets until US inflation and jobs data land later this week.
Why is the dollar near a two-month high?
Yields did most of the lifting. A deepening selloff in US Treasuries pushed the 10-year yield to its highest level since 2007 and the 30-year to its highest since 2004, according to Reuters. The two-year yield, the one most tied to Fed policy, climbed to its highest in more than two years and is now closing in on 5%.
That repricing shows up directly in rate expectations. Markets see a better than 70% chance of a Federal Reserve rate hike in October, up from 57% a week earlier, according to CME Group’s FedWatch tool.
Oil added a second push. Brent crude futures rose from near $106 a barrel early in the session to above $107 by about 05:00 GMT, Reuters reported. Markets doubted that renewed efforts to end the Iran war would get anywhere after President Donald Trump rejected Tehran’s ceasefire proposal.
How did major currencies move against the dollar?
The euro took the heaviest pressure among the majors. It sat near its weakest level in three months after the European Central Bank’s chief signalled measured steps to contain inflation, Reuters reported.
| Currency | Earlier in Asian trade | Updated Reuters report (05:02 GMT) | Note |
|---|---|---|---|
| Dollar index | 101.2 | 101.27 | On track for a 1.8% monthly gain |
| EUR/USD | 1.1367 | 1.1360 | Near a three-month low |
| GBP/USD | 1.3248 | 1.3242 | Down 0.1%, also near a three-month trough |
| USD/JPY | 157.40 | 157.50 | Yen gave back some of Monday’s gains |
| AUD/USD | Spiked to 0.7029 after the RBA decision, then retreated | RBA cash rate now 4.60% | |
| NZD/USD | Down 0.1% | 0.5657, down 0.2% | |
| USD/CNH | 6.71, little changed | After last week’s US-China summit | |
Source: Reuters, 29 September 2026. The two columns reflect different versions of the same report.
EUR/USD was already on the back foot. It broke below 1.1400 on Monday, 28 September, after Trump’s rejection of the Iranian offer, investingLive reported at the time. Tuesday’s print near 1.1360 extends that slide.
What did the RBA and Japan do?
The Reserve Bank of Australia (RBA) raised its cash rate to 4.60%, a 15-year high, in a unanimous decision on Tuesday, Reuters reported. The bank said it stood ready to hike again if inflation stays elevated. The Australian dollar jumped to $0.7029 on the news but couldn’t hold the gain. A central bank hiked to a 15-year high, and its currency still gave the move back within the session.
In Tokyo, the yen softened to around 157.5 per dollar. Japan’s top currency diplomat, Atsushi Mimura, said markets should heed the “very clear” warning that Tokyo and Washington issued last week about the yen, according to Reuters. That keeps the risk of intervention live.
What are analysts saying about the dollar?
Joseph Capurso, head of foreign exchange at the Commonwealth Bank of Australia, said he expects the dollar to keep edging higher. His reasoning, as Reuters reported it: stronger US economic data pushes up interest rates, and higher US rates support the currency.
What US data could move the dollar this week?
Two releases carry the most weight. Reuters said both are expected to strengthen the case for further Fed hikes.
| Date | Release | Why traders care |
|---|---|---|
| Wednesday, 30 September | US PCE price index | The Fed’s preferred inflation gauge |
| Friday, 2 October | US nonfarm payrolls | Tests whether the labour market justifies an October hike |
Analyst Take
This is a yield story first and an oil story second. Safe-haven buying alone doesn’t explain a two-year yield closing in on 5%. That level reflects traders pricing an actual Fed hike, and the dollar is following the front end of the curve. If the Iran headlines faded tomorrow, the rate gap would still be there.
The more telling detail is how small the dollar’s gains were. The 10-year yield sits at a 19-year high and hike odds are above 70%, yet the index moved only a fraction on the day. A lot is already in the price. That makes this week’s data lopsided. A hot PCE print or strong payrolls confirm what markets expect. A soft one would force a reprice of odds that jumped more than 13 points in a week. That unwind is where the bigger dollar move would come from.
The yen is the other risk to the dollar index. Mimura’s warning puts intervention on the table near 157.5, and Japan acting would hit the dollar regardless of what PCE shows.
One limit on all of this. The figures above come from two versions of one Reuters report taken at different times, and FedWatch odds shift with every release. None of it points to where the dollar trades on Friday.
FAQ
Why is the US dollar rising today?
Rising Treasury yields and firmer oil. The 10-year yield hit its highest since 2007, and markets now price a better than 70% chance of an October Fed hike, according to CME FedWatch. Brent crude also climbed above $107 after Trump rejected Iran’s ceasefire proposal.
What is the dollar index at?
About 101.27, per an updated Reuters report at 05:02 GMT on 29 September. It’s on track for a 1.8% gain this month.
Why is the euro near a three-month low?
The ECB’s chief signalled measured steps against inflation, while US yields keep climbing. That widens the gap in rate expectations in the dollar’s favour. EUR/USD traded around 1.1360 to 1.1367 on Tuesday, after breaking below 1.1400 on Monday.
When is the next big US data release?
Wednesday, 30 September, with the PCE price index. Nonfarm payrolls follow on Friday, 2 October. Reuters said both are expected to strengthen the case for another Fed hike, so a miss on either would be the bigger surprise.
Risk disclaimer: Trading forex and CFDs involves a high level of risk and may not suit every investor. This article is market news and commentary, not investment advice.
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