Dollar Faces Fresh Pressure as Euro and Pound Hold Near Multi-Month Highs

August 25, 2026

The U.S. dollar is struggling to extend its recent gains as traders assess geopolitical tensions, U.S. Treasury yields and expectations for Federal Reserve policy. The Dollar Index was around 98.96 in Asian trading on Tuesday.

Euro and Pound Remain Strong

The euro and British pound continued to trade near recent multi-month highs against the dollar, showing continued demand for currencies outside the U.S. dollar.

The market is also waiting for comments from Federal Reserve Chair Kevin Warsh at the Jackson Hole conference, which could provide clues about the future direction of U.S. interest rates.

Geopolitical Risks Add Volatility

New U.S. sanctions involving Iran have added another source of uncertainty for currency markets. While geopolitical tensions can create safe-haven demand for the dollar, concerns about U.S. fiscal policy and Treasury yields are limiting its upside.

U.S. Treasury yields remained elevated, with the 10-year Treasury yield around 4.704% during Asian trading.

Key Forex Levels to Watch

- Dollar Index: Around 98.96

- EUR/USD: Near recent multi-month highs

- GBP/USD: Near recent multi-month highs

- USD/JPY: Around 159

- USD/INR: Around ₹95.74

For Indian forex traders, USD/INR remains particularly important as crude oil prices, importer demand and possible RBI intervention continue to influence the rupee.

Market Outlook

Forex markets could remain volatile as traders await central-bank guidance and monitor developments around Iran, oil prices and U.S. Treasury markets. A stronger-than-expected signal from the Federal Reserve could support the dollar, while softer policy expectations could keep pressure on the greenback.

Disclaimer: This article is for informational purposes only and is not financial or investment advice. Forex trading involves substantial risk.

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