The US dollar is all set to post its strongest weekly gains in several months and begins Q4 on an extremely bullish note over rising anticipations for the Fed to become one of the first leading central banks to start implementing rate hikes after the pandemic. At the time of writing, the US dollar index DXY is trading around 94.30.

So far this week, the greenback has strengthened by 1.1% against its major rivals, marking the highest weekly gains seen since late June. The dollar’s strength has driven safe haven Japanese yen close to the lowest levels seen in 19 months while the common currency lost around 1.3% of its value against it.

Soaring US Treasury yields have helped support the US dollar’s recent bullish streak, sending investors towards the currency as hopes rise for the Fed to begin tapering stimulus measures before the end of this year. In addition, expectations for a rate hike coming as early as late 2022 are also growing, keeping the currency supported.

On the other hand, other major central banks like the ECB have no plans to increase interest rates anytime soon, which could keep majors trading under pressure against the greenback. Analysts expect EUR/USD to trade within a range between 1.12 and 1.16 in the coming weeks as investors continue to cheer the Fed’s hawkish tilt.

During Q3 2021, one of the worst performing currencies among G10 nations was the AUD which dropped by 3.6% against the USD. The decline was driven by a cautious mood among investors keeping the risk-sensitive currency weak even as the price of iron ore – one of Australia’s key exports, crashed, exerting further downward pressure on its currency.