USD rises as Treasury lifts Q3 borrowing forecast to $1 trillion

The US dollar has strengthened across major pairs following the Treasury's announcement of an increased borrowing estimate to $1.01 trillion for Q3 2025, up from previous projections. This substantial revision reflects the recent debt ceiling suspension that enabled a $5 trillion increase in borrowing capacity. The Treasury is accelerating bond issuance to rebuild cash reserves, targeting an $850 billion balance by September's end. Q4 borrowing is projected at a lower $590 billion. The announcement has pushed Treasury yields higher, with the 10-year yield climbing 8 basis points to 4.35%. Dollar index (DXY) gained 0.4% to 104.20, pressuring EUR/USD down to 1.0820 and GBP/USD to 1.2850. The increased supply of Treasuries is expected to maintain upward pressure on yields, supporting dollar strength. Traders should monitor upcoming Treasury auctions for potential volatility in USD pairs.