Dollar extends gains as US Treasury yields rally

The US dollar rose against a basket of major currencies on Tuesday, extending gains for the third straight day, following the US 10-year Treasury bond yield's jump to a 2-year high, which boosts the dollar's investment attractiveness, amid anticipation of Federal Reserve meeting next week.

The dollar index rose 0.4% to 95.57 points, after opening at 95.22 points, and hit a low of 95.12 points.

The US dollar gained 0.1% yesterday, the third straight daily gain, thanks to recovery from a 2-month low of 94.62 points.

US 10-year treasury yields rose 2.1%, the third such gain in a row, marking a 2-year high at 1.856% while analysts expect it to reach 2% soon.

These developments in the bonds market came due to growing chances that the Federal Reserve will raise interest rates next March, in the first of three expected rate hikes this year, with the possibility of a fourth hike if inflation continues to rise.

Markets are awaiting the Federal Reserve's first monetary policy meeting in 2022 next week, which is expected to provide more cues about this year's interest rate hikes.