The US dollar climbed to its highest level against the euro since March, driven by a sudden shift in market sentiment toward tighter Federal Reserve policy.
The greenback also gained ground against the Polish zloty, pushing the pair to its highest readings since late March on the domestic currency market.
This move marks a significant departure from the recent market regime, which had been characterized by a rally fueled by geopolitical peace hopes and falling oil prices.
That earlier optimism has given way to caution as investors digest a series of unexpectedly high inflation readings in the US.
The repricing reflects a growing concern that the Federal Reserve may need to maintain restrictive policy for longer than previously anticipated.
According to Fed funds futures, traders are now pricing in a potential rate hike as early as December for the first time in the current cycle.