U.S. Dollar Climbs As Treasury Yields Remain Firm

The U.S. dollar advanced against its key counterparts on Monday, as U.S. Treasury yields strengthened amid fears over a spike in inflation.

The benchmark 10-year Treasury yields remained above 1.6 percent as accelerating vaccinations and stimulus measures spurred hopes of a faster recovery and higher inflation.

Treasury Secretary Janet Yellen said last week that U.S. inflation risks remain subdued despite the Biden administration stimulus.

Investors focus on the Fed meeting due this week for more clues about economic growth outlook.

The decision will be published at 2 pm ET Wednesday, followed by a press conference with Chairman Jerome Powell.

Markets will be keeping a close eye on Powell's comments about the central bank's plans to address rising yields in the future.

Traders also await U.S. reports on retail sales, industrial production, housing starts, and regional manufacturing activity this week for more direction.

The greenback edged higher to 1.1918 against the euro, 1.3896 against the pound and 0.9313 against the franc, off its early lows of 1.1968, 1.3950 and 0.9276, respectively. The next possible resistance for the greenback is seen around 1.16 against the euro, 1.37 against the pound and 0.94 against the franc.

The greenback appreciated to more than a 9-month high of 109.37 against the yen and a 5-day high of 0.7721 against the aussie, after falling to 108.91 and 0.7776, respectively in early deals. The greenback is likely to face resistance around 110.00 against the yen and 0.75 against the aussie.

Reversing from its early low of 0.7216 against the kiwi and more than a 3-year low of 1.2455 against the loonie, the greenback recovered to 0.7181 and 1.2494, respectively. The greenback is seen finding resistance around 0.70 against the kiwi and 1.27 against the loonie.

Looking ahead, at 8:15 am ET, Canada housing starts for February are scheduled for release.

Canada manufacturing sales for January and New York Fed's empire manufacturing survey for March are set for release during the New York session.