In this framework, the dollar index, which measures the greenback against a basket of other major currencies, rose to 94,563, its highest since the end of September 2020.
Rising bond yields in the United States prompted investors to ditch the yen against the dollar. The US currency remained near three-year highs against its Japanese peer, which has fallen 4% against the greenback in three weeks. The euro was down 0.2% against the dollar to $ 1.1525, its lowest level since July 2020.
“The main driver of this movement is the new rise in US Treasury yields, so this is a fairly simple story of a widening rate differential, which increases the attractiveness of the carry trade,” he said Ray Attrill, Head of Currency Strategy at National Australia Bank.
For his part, Joseph Trevisani, senior analyst at FXStreet.com, said that “the credit markets anticipate that the ‘taper’ (reduction of the purchase of bonds) will begin in November”.
Investors will closely follow Wednesday’s US consumer price index data and Friday’s retail sales data for more clues as to when the Federal Reserve will begin to reduce its stimulus.
A Deutsche Bank monthly survey of market sentiment this month noted that an overwhelming majority of respondents expect US Treasury yields to rise from current levels.
In terms of cryptocurrencies, bitcoin was down 3% to $ 55,750 while Ether, the world’s second largest cryptocurrency, was down 1.4% to $ 3,495.
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