The dollar climbed to a two-week high against the euro on Monday as traders reduced bets on aggressive rate cuts by the Federal Reserve, focusing instead on the upcoming U.S. jobs report. The dollar’s strength was supported by a rise in long-term Treasury yields, following stable U.S. inflation data that lessened the urgency for the Fed to implement a large 50 basis point cut in September. Current market expectations now show a 33% chance of a 50-bp cut, down from 36% a week earlier.

The dollar also reached its strongest level against the yen since August 21, though it later pulled back slightly. Analysts suggest that the dollar’s recent gains may not be sustained unless it breaks key resistance levels. Meanwhile, the euro weakened, and the outlook for both the Fed and the European Central Bank to ease rates this month has made it challenging to predict significant movements in the EUR/USD pair. All eyes are now on Friday’s non-farm payrolls report, which could further influence Fed rate decisions.