The Bloomberg Dollar Index climbed to its intraday high, as S&P purchasing managers' index data revealed that US business activity expanded at the fastest pace in five years, strengthening expectations that the Federal Reserve will continue raising interest rates. Against the yen, the dollar fell for a fourth consecutive session, marking the lowest level for the currency in nearly three weeks. The gauge rose 0.5%, extending its winning streak to four straight trading days, after S&P Global reported that the preliminary US composite PMI for September jumped to 58.4, the highest reading since July 2021.

In the forex market, the dollar rose 0.6% against the yen to 158.31, breaching the level reached on Friday when the Bank of Japan was reported to have conducted a verbal check on exchange rates. The euro slipped as much as 0.6% against the dollar to 1.1384, hitting a nearly two-month low. S&P PMI figures also showed that eurozone private-sector activity expanded at the fastest pace in more than three years.

Strategist Francesco Pesole at ING noted that the dollar continues to exhibit remarkable resilience amid falling oil prices and improving risk sentiment. He added that when crude prices decline, markets may be quicker to scale back bets on European Central Bank rate hikes rather than those on Fed hikes, which implies that the euro still faces further downside risks. Meanwhile, the pound fell for a third consecutive day against the dollar, reaching its lowest level since early July.