The U.S. dollar climbed to its highest levels in weeks following the release of the January Federal Open Market Committee minutes. The report signaled a hawkish shift in policy sentiment, cooling expectations for immediate rate relief and pushing the U.S. Dollar Index (DXY) to approximately 97.71. The greenback's strength is fueled by a Federal Reserve that appears divided but largely cautious. While the benchmark interest rate remains in the 3.5% to 3.75% range, the minutes revealed that several policymakers are open to discussing rate hikes if inflation does not continue its descent toward the 2% target. This "two-sided" policy outlook has anchored the dollar as a preferred asset. Recent economic data has supported this stance, with durable goods orders and industrial production both exceeding consensus expectations. The January inflation print arrived at 2.4%, down from 2.7%, but the Fed remains wary of price volatility driven by potential trade shifts and labor market stability. In the bond market, the 10-year Treasury yield rose to 4.08%, snapping a three-day streak of declines. This upward movement in yields reflects a market recalibrating for a "higher for longer" interest rate environment. The spread between the 10-year and 2-year yields remains at 0.62%, indicating a persistent curve dynamic as investors weigh long-term growth against near-term policy restrictions. The surge in the dollar has placed significant pressure on major currency pairs. The Euro dropped toward the 1.178 level, struggling against the backdrop of a more aggressive U.S. rate outlook. Simultaneously, the Japanese yen weakened further, with the USD/JPY pair trading near 154.97 as the yield differential between the U.S. and Japan continues to favor the greenback. Regional currencies are also feeling the impact. The Malaysian ringgit eased to 3.89 against the dollar, and other Asian currencies remained on the defensive. Markets are now pivoting their focus toward the upcoming Core PCE report, which serves as the Fed's preferred inflation gauge. The current sentiment suggests that while two rate cuts may still be on the table for later in 2026, the window for a March reduction is rapidly closing. Investors are now pricing in a more resilient U.S. economy, which provides the Fed with the necessary cushion to maintain current rates until clearer evidence of a sustained 2% inflation path emerges.