LONDON—The dollar surged to a three-week high against the euro on Monday, with traders expecting the U.S. Federal Reserve to lift its benchmark rate above 5 percent to squeeze inflation after data showed the labor market remains strong.
An earthquake in central Turkey and northwest Syria and a strong U.S. dollar added pressure on emerging currencies sending Turkey’s lira to a record low of 18.85 against the dollar.
The Fed on Wednesday raised rates by 25 basis points and said it had turned a corner in the fight against inflation, leading investors to price in a slowdown in the pace of rate hikes going forward….