Dollar Holds Firm Amid Inflation Fears

The US dollar held firm near its three-week high as investors reassessed their expectations of inflation. The 10-year Treasury yield climbed to 4.7% after rising US tariffs and an increase in oil prices stoked concerns about inflation.

Brent crude surpassed $100 a barrel for the first time since attacks on Saudi oil tankers in the Red Sea, while new tariffs of 10% and 12.5% on goods from 60 trading partners were outlined by the Trump administration. When markets anticipate stickier inflation, they often demand higher interest rates to lend to the US government, which pushes down Treasury prices and lifts yields.

The dollar's strength is also being driven by higher short-term US yields, which widen the gap with Japan's still-low rates. The yen stayed near 163.80 per dollar, close to a 40-year low, as investors sought safer havens in the face of uncertainty.