US Dollar volatility is accelerating quickly in the wake of the latest Federal Reserve announcement. The Fed left its benchmark interest rate and pace of asset purchases unchanged as widely expected, but markets seem to be reacting to information revealed in the updated dot plot. FOMC officials now see two interest rate hikes by the end of 2023 according to the Fed dot plot. This stands to bring forward the Fed taper timeline, which is sending the US Dollar and Treasury bond yields sharply higher in turn.

US DOLLAR INDEX PRICE CHART WITH TEN-YEAR TREASURY YIELD OVERLAID: 1-HOUR TIME FRAME (09 JUNE TO 16 JUNE 2021)

Chart by @RichDvorakFX created using TradingView

The broader DXY Index currently trades about 0.5% higher on the session and at its strongest level since early May. The yield on ten-year Treasury bonds is up 5-basis points to 1.53%. Markets now tune in to Fed Chair Powell who will provide additional color on policy guidance during his follow-up press conference.