NEW YORK—The dollar rallied against the yen, euro, and other currencies on Tuesday after stronger-than-expected U.S. inflation data boosted investor bets that the Federal Reserve will need to stay aggressive in raising interest rates.
The dollar index, which tracks the greenback against its peers, was up 1.5 percent at 109.85 in its biggest one-day percentage gain since March 2020. It was still below last week’s two-decade peak of 110.79. The index turned positive after the data release.
The euro, pound and yen all weakened sharply. The euro was last down 1.5 percent versus the greenback at $0.9973, after hitting a nearly one-month high of $1.0198 in the previous session. The euro has traded below parity in 16 of the last 17 sessions….