USD reaches 3-month high as Fed rate cut expectations diminish

The US dollar index climbed to a three-month peak at 104.25, strengthening 0.4% as traders significantly reduced expectations for near-term Federal Reserve rate cuts. Market pricing now shows only a 65% probability of a December cut, down from 85% last week, following hawkish signals from divided FOMC members. USD/JPY approached intervention-warning levels near 153.00, gaining 0.3% as yen weakness persisted despite Ministry of Finance vigilance. The Reserve Bank of Australia meeting today is expected to maintain rates at 4.35%, potentially supporting AUD/USD currently trading at 0.6580. Dollar strength reflects robust US economic data contrasting with softer global growth prospects. Key resistance for the dollar index lies at 104.50, with support at 103.80. Continued Fed hawkishness could propel further dollar gains, particularly against low-yielding currencies facing dovish central bank pressures.