Dollar Hits 8-Week High After Fed Rate Hike; Euro Slips on German Political Shift

The dollar rose to an eight-week high on Monday, extending last week's rally after the Federal Reserve delivered its first rate increase in more than three years. The dollar index gained 0.2% to 100.43, its highest since July 29. The FOMC voted unanimously to raise the federal funds rate to 3.75%-4.00% from 3.50%-3.75%. Updated projections showed at least 12 committee members expect another hike this year. Fed Chair Kevin Warsh said inflation "is too high and has been for too long." The euro fell 0.2% to $1.1463 as markets digested weekend election projections showing the far-right AfD leading a state vote in northeastern Germany, weakening Chancellor Friedrich Merz's conservative bloc. The yen weakened 0.3% to 157.36 per dollar, extending last week's roughly 2% slide after the Bank of Japan raised borrowing costs to 1.25%, a 31-year high. Japanese markets were closed Monday for a three-day holiday.