The Bloomberg Dollar Spot Index rose 0.4% to 1,199.14, its highest since August 19, after Fed Chair Kevin Warsh vowed to bring inflation down to the 2% target. According to Sina Finance, the dollar climbed to a more than one-week high as Warsh warned inflation had not shown a meaningful slowdown and said the Fed still had "work to do" unless policymakers were confident inflation was slowing materially.

Traders again priced in a 25-basis-point rate hike by year-end and another 25-basis-point increase by March 2027. The euro fell 0.6% to 1.1580 against the dollar, while the yen weakened and slipped below the closely watched 160-per-dollar level.

The dollar rose 0.5% to 160.17 yen after intervention gains had largely faded. According to Sina Finance, strategists said intervention by Japan and the United States had slowed the yen's short-term decline but had done little to change the factors driving its longer-term weakness.

Monex Inc. FX trader Andrew Hazlett said Japan's record intervention last month had done little to change the yen's underlying weakness, and that raising rates at next month's policy meeting would be a good start, but authorities would need to narrow the interest-rate gap with other major economies to stop the yen's slide.

The dollar also rose 0.4% to 1.3908 Canadian dollars after Canada's economy grew at an annualized 3.3% in the second quarter, confirming a strong rebound after a year of weakness tied to U.S. tariffs and slower immigration. Economists had expected 3.4%.

Sterling fell 0.5% to 1.3529 against the dollar.