The US dollar surged to its highest level against the euro since March, driven by a sharp shift in market sentiment toward a more restrictive Federal Reserve policy path.
The greenback also gained significant ground against other major currencies, including the Polish zloty, as investors repriced the likelihood of prolonged higher interest rates.
In Asia, the Philippine peso weakened for a fourth consecutive trading day, returning to the P61:$1 level as the broader dollar strength weighed on emerging market currencies.
US Treasury yields climbed in response to the hawkish pivot, with the 10-year yield rising as traders adjusted their expectations for the federal funds rate.
The move reflects growing consensus that the central bank will maintain a tighter stance for longer than previously anticipated, reducing the probability of near-term rate cuts.
The currency volatility extends beyond the euro zone.
In Asia, the Philippine peso weakened for a fourth consecutive trading day, returning to the P61:$1 level as the broader dollar strength weighed on emerging market currencies.