Dollar holds near two-month high as Treasury yields extend rise

The dollar remained near a two-month high as rising U.S. Treasury yields supported the currency despite softer-than-expected August inflation reducing expectations for an October Federal Reserve rate increase. The euro fell nearly 2.5% in September to $1.1330, its largest monthly decline since July 2025, while sterling dropped 2.1%. The yen slipped to 157.82 per dollar but gained nearly 1.5% in September as intervention concerns supported it. Australian and New Zealand dollars also weakened after changing expectations for domestic interest-rate policy.