The euro tumbled as low as $1.0051 against the U.S. dollar, the weakest since December 2002.

The dollar index reached 108.19, the highest since October 2002.

The US currency has gained on expectations that the Fed will continue to aggressively raise rates as it tackles soaring inflation.

“The Fed is going to raise rates more aggressively than most other developed market central banks and we don’t think other developed market central banks really have the bandwidth to keep up,” Rai said.

The Fed is expected to lift rates by 75 basis points at its July 26-27 meeting. Fed funds futures traders are pricing for its benchmark rates to rise to 3.50 per cent by March, from 1.58 per cent now.

US consumers see inflation rising further in the year ahead but expect a more moderate pace over the longer term in a signal that inflation expectations remain reasonably anchored, a survey from the New York Fed showed on Monday.

Consumer price data due on Wednesday is this week’s major U.S. economic focus. Economists polled by Reuters expect the index to show that consumer prices rose by an annual rate of 8.8 per cent in June.

The Australian dollar was the worst performer on the day, falling to a two-year low on global growth fears. Multiple Chinese cities have adopted fresh COVID-19 curbs, from business halts to lockdowns, to rein in new infections, which could create new supply disruptions.

The Aussie fell as low as $0.6716, the weakest since June 2020. In the cryptocurrency market bitcoin fell 1.62 per cent to $20,519.

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