Institution: Dollar and yield divergence may reflect changes in Fed outlook.

As the market reacts to the Federal Reserve policy and easing geopolitical tensions, the dollar strengthens while US bond yields decline. The Federal Reserve last week released a surprisingly hawkish signal, boosting expectations for at least one rate hike this year, possibly even two, which will support the dollar. Frank Walbaum of Naga.com said, "The spot price of the dollar may continue to react to the recent rate hike risks." Meanwhile, falling oil prices have alleviated concerns about inflation, putting pressure on yields. Walbaum stated that the Fed's commitment to continue fighting inflation has reassured the market that interest rates will fall after potential tightening policies. The Wall Street Journal Dollar Index rose by 0.3%. The 10-year US bond yield was at 4.416%, having briefly hit 4.5% overnight.