Dollar Slides to Three-Month Low as Treasury Moves to Contain Bond Selloff

By Staff, Agencies

The US dollar fell to a three-month low on Thursday as a Treasury intervention sought to contain a bond selloff that had pushed long-term yields to their highest levels in years.

The dollar index dropped to 98.813, its weakest since mid-May, while the euro rose to $1.1676 and the yen traded at 158.45 per dollar.

Bond markets in Japan and Europe also came under pressure amid concerns over rising government debt and potentially higher oil prices linked to the ongoing US-“Israeli” war on Iran.

Meanwhile, the 30-year Treasury yield, which reached a 19-year high of 5.337% earlier this week, eased to 5.184% after the Treasury announced plans to double buybacks of longer-dated government bonds.

The strategy shifts more borrowing toward short-term bills while repurchasing existing long-term debt, reducing supply pressure without requiring the Federal Reserve to expand its balance sheet.

Analysts said the move could weaken a key source of dollar support, with StoneX’s Matt Simpson suggesting the currency’s yearly peak may have passed.

Sterling remained near a three-month high, while the Swiss franc eased after reaching a two-month high.

At the same time, Federal Reserve minutes showed several officials could support an interest-rate hike if inflation fails to approach the 2% target.

Analysts said markets will now test whether the Treasury’s intervention can hold, with any loss of confidence potentially weighing further on sentiment.