The dollar index hit the 101 mark for the first time since March 2020 on Tuesday, underpinned by elevated US Treasury yields, as investors braced for multiple half-point rate hikes from the Federal Reserve as it seeks to rein in soaring inflation. St. Louis Fed President James Bullard, a noted hawk, said Monday US inflation is “far too high” as he repeated his case for increasing interest rates to 3.5% by the end of year.
The Fed raised its target policy rate by 25 basis points last month, and its forecasts released at the time showed policymakers expected rates to rise to 1.9% by year-end. Bullard’s preferred rate path would require half-point rate hikes at all six of the Fed’s remaining meetings this year. The dollar also gained on expectations of good economic data, with analysts pointing to US economic outperformance relative to other major economies amid global headwinds.