Hawkish Powell lifts the dollar; DXY to reach fresh highs?

J. Powell's words at the November FOMC meeting are constructive for the dollar since they signaled the need to raise interest rates higher than previously believed and to maintain monetary policy restrictive for longer.
The dollar's interest-rate advantage over other major currencies will persist as Fed futures reprice across all maturities and Treasury yields rise. This is especially true against the euro, given the most recent ECB meeting was actually more dovish than anticipated.
The likely increase in the yield differential between US Treasuries and German bonds will exert downward pressure on the EUR/USD exchange rate and upward pressure on the DXY index.
The DXY index has a high level of linkage with the yield on the 2-year Treasury note; the correlation coefficient over the past 90 days sits at 0.91. As Powell indicated that interest rates would be higher than the FOMC's September predictions (4.6%), and would be maintained at a restrictive level for a longer period of time, a new upward repricing of US short-term Treasury yields could occur shortly.
A strong non-farm payroll figure on Friday and another strong US inflation reading next week will cement the Fed's hawkishness and might push the US dollar index (DXY) to fresh yearly highs.