The euro fell to a two-month low against the US dollar today amid rising fears that US bond yields will reduce demand for euro-zone bonds and equities, sending EURUSD to 1.2181, down about 3% from its peak since the beginning of 2018.
The pound also hit its lowest level since mid-March against the dollar after five consecutive days of decline before recovering slightly today amid concerns about the performance of the British economy, reaching the levels of 1.3917.
The yield on 10-year US Treasury bonds was at the highest level in more than 4 years at 2.999%, close to the psychological barrier of 3%, supporting the rise of the dollar index to its highest level since January 12 at 91.08.
The strength of the US dollar has intensified pressure on some commodity currencies such as the Australian dollar, which hit its lowest level in 4 months, helped by Australian inflation data that came less than expectations in the first quarter of 2018, as the CPI rose by 0.4% on a quarterly basis and by 1.9% on yearly basis.
Inflation in Australia is still far from the Reserve Bank of Australia's target for the third year, which excludes the idea of raising interest rates in the near term to staying at 1.5% record lows.
