The dollar reaches its highest level in five weeks on hawkish comments from the Fed before Jackson Hole.

On Monday, the U.S. dollar index reached a new high for the period of five weeks after another official from the Federal Reserve indicated the probability of ongoing aggressive monetary tightening in advance of the important Jackson Hole symposium that will take place this week.

After Russia declared that there would be a three-day halt to European gas supplies via the Nord Stream 1 pipeline at the end of this month, which would exacerbate the energy situation in the region, the euro fell to a new low not seen in more than five weeks.

China's central bank slashed key lending rates, adding to a slew of other monetary easing measures designed at bolstering up an economy suffering from COVID-19 clampdowns and a property crisis. As a result, the Chinese yuan fell to its lowest level in over two years, marking a new low for the currency.

The U.S. dollar index, which compares the value of the dollar to that of six other currencies including the euro, reached 108.26 for the first time since July 15 and is currently trading at 108.23, which is an increase of 0.074% from its previous value.

This comes after a gain of 2.33% the previous week, which was its greatest weekly rally since April 2020. This comes as a chorus of Fed policymakers have been emphasizing that more has to be done to reign in decades-high inflation.

Thomas Barkin, president of the Richmond Federal Reserve, stated on Friday that there is a "urge" among central bankers to move toward more rapid and front-loaded rate rises.

"Fed speakers have been emphasising the notion that further rate hikes are coming given that the fight against inflation has not yet been won," scaring markets ahead of Jackson Hole on August. "The struggle against inflation has not yet been won."

25-27, in light of the increasing likelihood that the Chair of the Federal Reserve, Jerome Powell, would emphasize that further monetary policy tightening is "still a long way from the end," as Rodrigo Catril, a senior FX analyst at National Australia Bank, stated in a client note.

The money markets currently imply a probability of 47.5% for another supersized 75 basis point rate hike on September 21, and a probability of 52.5% for a half-point increase.

With the likelihood of a recession growing higher, economists polled by Reuters tilt toward expecting a jump of 50 basis points in interest rates.

Yields on benchmark 10-year United States Treasury notes surged above 3% during trading in Tokyo on Monday, marking the first time since July 21 that they have been above that threshold.

The dollar reached its highest level against the yen since July 27, when it reached 137.40 yen. The yen is a currency that is very sensitive to yields in the United States.

After the People's Bank of China cut the one-year and five-year loan prime rates as was largely expected, the dollar surged as high as 6.8308 yuan in onshore trade for the first time since September 2020. This was the first time the dollar had reached this level since September 2020.

This comes after it made a surprising step last week to lower the cost of borrowing money.

The dollar reached 6.8520 against the offshore yuan, which is also the highest level it has reached since September 2020.

During this period, the value of the euro reached a new low of $1.0026, which hadn't been seen since the 15th of July, before trading down 0.13% at $1.0027.

The price of sterling dropped by 0.23% to $1.1805, coming dangerously close to Friday's five-week low of $1.17925.