On Thursday, The dollar eased back from three-and-a-half month highs against a currency basket as investors took a breather after a recent rally driven by rising Treasury yields.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, dipped to 90.98 by 07:58 AM ET (11:58 AM GMT), still within close reach of Wednesday’s highs of 91.04, the most since January 12.
Rising U.S. yields and the prospect of a faster pace of rate hikes by the Federal Reserve this year have boosted the dollar in recent sessions. Expectations of higher interest rates make the dollar more attractive to investors seeking yield.
The yield on 10-year U.S. Treasury notes rose above 3% for the first time since 2014 this week, a sign of confidence in the outlook for the U.S. economy.
The dollar slid lower against the yen, with USD/JPY down 0.24% to 109.17 after setting a fresh two-and-a-half month high of 109.46 overnight.
With EUR/USD last at 1.2157, not far from Wednesday’s two-month trough of 1.2158,The euro was little changed against the dollar.
The single currency showed little reaction after the European Central Bank left interest rates on hold as investors awaited the bank’s post-policy meeting press conference to gauge its view of the euro area economy and the strength of the euro.
With GBP/USD rising 0.26% to 1.3966,The pound pulled back from five-week lows.