Investing.com -- The U.S. Dollar Index rose sharply on Tuesday, soaring to a fresh four-month high, as the greenback surged against the euro and the British Pound ahead of a key European Central Bank meeting later this week.
At session-highs, the index surged to 97.18, soaring to its highest level since March 9. The index, which measures the strength of the greenback versus a basket of six other major currencies, is up considerably in the aftermath of last month's historic Brexit decision. More broadly, the index is up more than 4% since touching down to 10-month lows in early-May.
The Pound Sterling crashed by more than 1.1% to 1.3075 against the dollar, falling to its lowest level in a week. It came after U.K. international trade secretary indicated that the ministry could target January 1, 2019 as a potential Brexit date. At the same time, Fox noted that the date could be pushed forward if necessary. Separately, first minister Nicola Sturgeon said it still remains possible that Scotland could stay in the European Union, as well as U.K. A referendum for Scotland's departure from the U.K. was defeated handily in 2014.
The euro also fell more than 0.5% against the Dollar to an intraday low of 1.1000, remaining near three-month lows. On Sunday, reports surfaced that the Italy government is working on a proposal to establish a €50 billion bad bank loan facility to provide a lifeline for its struggling bank sector. The reports have triggered fresh concerns about potential insolvency among a host of top Italian banks.
Meanwhile, when the ECB's Governing Council meets on Thursday the ECB is widely expected to stand pat in its first interest rate decision since last month's historic Brexit referendum. Many analysts expect the ECB to hold rates steady given the relative lack of economic data since the U.K.'s shocking decision on June 24.
Next week, the Federal Reserve will also issue its latest interest rate decision upon the completion of its two-day July meeting on July 27. Since the Federal Open Market Committee (FOMC) left short-term rates unchanged in June, a number of policymakers have been split on the timing of the U.S. central bank's next rate hike. Any rate hikes this year are viewed as bullish for the dollar, as foreign investors pile into the greenback in order to capitalize on higher yields.
Elsewhere, USD/TRY rallied from sharp early losses to hit an intraday high of 3.0602, approaching near 1-year highs. The Dollar has gained nearly 6% against the Turkish Lira since Friday's failed military coup in Ankara and Istanbul.
Yields on the U.S. 10-Year fell three basis points to 1.55%. Yields on the 10-year U.S. Treasuries have plunged nearly 80 basis points over the last year.