Dollar Strength Persists Amid US Yield Hikes and Inflation Fears

The US Dollar has shown a moderate softening tone on Wednesday, weighed down by the recent pullback in US Treasury yields and some dovish comments from New York Fed President John Williams.

The Dollar Index (DXY) has pulled back to 101.20 from two-month highs above 101.60 on Tuesday, but it remains on track for a 1.8% monthly gain.

Analysts at major banks see high US Treasury yields, rising oil prices stemming from the Middle East war that are boosting global inflation, and the reaffirmation of the Federal Reserve's (Fed) commitment to fight inflation as the main reasons behind the US Dollar's uptrend.

The analysts at ING note that the Japanese Yen remains 'the sole exception to the broader Dollar strength trend.'