U.S. Dollar Hits One-Year High as Fed Rate Hike Expectations Surge to 36%

The U.S. dollar rallied on June 23, pushing the dollar index (DXY) to a one-year high of 101.39, up 0.4%, as market expectations for Federal Reserve rate hikes surged on hawkish policy signals from the Fed's latest decision.

According to the CME FedWatch tool, market odds of a rate hike in July have jumped to 36%, up sharply from 8.5% a week prior. The shift reflects the Fed's updated economic projections released last week, which showed at least half of Federal Open Market Committee members now expect hikes this year. Meanwhile, the yen weakened to 161.58 against the dollar, approaching its lowest level since 1986, raising concerns about potential Japanese intervention.