The US dollar has reached a 10-month high against major currencies, including the euro and sterling, as the possibility of higher interest rates in the US looms. This has caused US Treasuries to stabilize, keeping the dollar strong. The euro and sterling have hit six-month lows, with the euro on track for its worst quarterly performance in a year. Meanwhile, the yen has fallen against the dollar, nearing intervention territory for Japanese authorities. The rise in US yields continues to put pressure on the yen, and traders are on high alert for signs of intervention.

The increase in US yields has been driven by recent statements from Federal Reserve officials suggesting the need for further interest rate hikes. As a result, the benchmark 10-year yield has reached a 16-year high. The yen, which is highly sensitive to changes in long-term US Treasury yields, has fallen to an 11-month low against the dollar. The decline has raised concerns of possible intervention by Japanese authorities if the yen passes the psychological level of 150 per dollar, as it did last year. However, some analysts believe that even intervention may not permanently reverse the decline in the dollar/yen pair unless bond yields start to retreat significantly.

In other currency news, the Australian dollar has fallen slightly in response to data indicating an increase in Australia’s inflation rate. However, this is not expected to impact the Reserve Bank of Australia’s decision to hold interest rates steady at their next meeting. The New Zealand dollar has also slipped against the US dollar. Overall, the strength of the US dollar and rising US yields are shaping global currency markets, with traders keeping a close eye on potential interventions and central bank decisions.

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