Dollar holds near two-month high as yields rise, Fed data looms

The dollar hovered near a two-month high on Tuesday, supported by rising Treasury yields and volatile oil prices, though gains were capped as traders awaited US economic data for signals on the Federal Reserve's rate path. The euro traded near a three-month low at $1.1367 after the European Central Bank signalled measured inflation steps, while sterling held steady at $1.3248. The dollar index rose to 101.2, heading for a 1.8% monthly gain, its best since June. US 10-year Treasury yields hit their highest since 2007, and the two-year yield approached 5%. Markets now price a 70% chance of a Fed rate hike by end-October, up from 57% a week ago. Upcoming data, including the PCE price index and nonfarm payrolls, are expected to support further hikes. The Australian dollar fell ahead of a likely rate rise, while the yen weakened to 157.40 per dollar amid intervention risks.