NEW YORK / RankWire.AI / – The U.S. dollar climbed to a seven-week high on Thursday after the Federal Reserve raised interest rates for the first time in more than three years. The dollar index reached 100.36 against its major peers after gaining 0.7% overnight. That marked its biggest daily advance in three months. Earlier trading had pushed the index to 99.961, then a five-week high, before the currency extended its gains as global markets absorbed the U.S. rate decision.
The stronger dollar pushed the euro down to $1.1463, near its lowest level in seven weeks. Sterling traded around $1.3372 ahead of a scheduled Bank of England policy announcement. The dollar also strengthened to 155.98 yen, leaving the Japanese currency near a two-week low. Those levels extended moves recorded earlier Thursday, when the euro stood at $1.1502 and sterling at $1.34155. The dollar had traded at 155.49 yen during that earlier stage of the session.
The U.S. central bank voted 12-0 on Wednesday to raise its federal funds target range by 25 basis points. The new range stands at 3.75% to 4.00%. Policymakers said economic activity continued to expand at a solid pace, while domestic spending remained resilient. They also said inflation remained elevated. The central bank said the rate increase would support a more timely return of inflation to its 2% goal. The higher target range took effect on September 17.
Treasury yields reinforce dollar advance
U.S. Treasury yields moved sharply after the interest-rate decision, with shorter maturities showing some of the largest changes. The two-year Treasury yield stood near 4.72% after reaching its highest level since July 2024. The benchmark 10-year yield returned to around 5% after dropping as low as 4.9385% overnight. The 30-year Treasury yield stood near 5.35%, below a recent 19-year high of 5.401%. Higher short-term yields accompanied the dollar’s rise across major currency markets.
The Federal Reserve also released updated economic projections alongside its September policy decision. Officials’ median projection placed the federal funds rate at 4.1% at the end of 2026, up from 3.8% in June. The median forecast for personal consumption expenditures inflation rose to 3.7% for 2026 from 3.6% previously. Core PCE inflation was projected at 3.4%, while the unemployment rate was projected at 4.1%. Officials projected real gross domestic product growth of 2.3% for 2026.
Major central bank decisions remain in focus
Currency markets were also preparing for scheduled monetary policy decisions in Britain and Japan. The Bank of England was due to announce its latest decision later Thursday. The Bank of Japan was scheduled to release its policy decision on Friday. Elsewhere, the Australian dollar strengthened 0.35% to $0.7111, while the New Zealand dollar rose 0.2% to $0.5725. The moves came during a broad session of adjustment across global currencies following the U.S. interest-rate increase and the accompanying rise in short-term Treasury yields.
The dollar’s latest advance extends the move first recorded after Wednesday’s rate announcement. Updated trading pushed the dollar index beyond its earlier five-week peak and to its strongest level since late July. The move also left several major currencies at multiweek lows against the greenback. The rate increase marked the first U.S. increase since 2023 and followed five consecutive policy meetings without a change this year. Thursday’s currency levels reflected the first full global trading session after the new 3.75% to 4.00% target range was announced.