The dollar, on Thursday, March 9, soared to a three-week high against the yen, on course for a fourth straight day of broader gains.
As the dollar struggled last week to make more progress on the back of a flip in money markets toward a rise in official U.S. interest rates this month, a number of analysts had pointed to muted moves in 10-year yields as one element holding the currency back.
It broke above 2.52 percent for the first time this year on Wednesday and was trading at close to 2.58 percent in early trade in Europe on Thursday. That helped the dollar jet half a percent higher to 114.90 yen.
Citi currency strategist Josh O’Byrne said that expectations of a positive shift in the European Central Bank’s rhetoric on the economy ahead of a statement and news conference later on Thursday may also have played a role in those moves.
“We broke 2.52 percent yesterday, which was the high of the range in recent weeks and certainly there seems to be some more optimism (around the dollar),” he said.
“Less dovish expectations on the ECB are helping diminish some of the pressure on long-end yields in the U.S. too and that is having more influence on the dollar against some of the higher yielders and dollar yen.”
The dollar was also marginally higher at $1.0547 per euro and traded above 102 on the index against a basket of currencies used to measure its broader strength.
The European Central Bank is set to keep monetary policy on hold on Thursday as it casts a cautious eye ahead to high-risk elections in the Netherlands and France during an upsurge in populist, anti-establishment sentiment.
