The US dollar hit a three-month high as US bond yields rallied above the 3% barrier, pushing the major currencies lower against the US dollar and making investors think that US dollar has recovered from its recent weakness.
The dollar index, which measures the performance of the dollar against a basket of currencies, rose to its highest level since January 12 at 91. Eyes will be on GDP data and its impact on the dollar and whether it will continue its gains.
The dollar's rally pushed other major currencies to retreat against it, especially the euro, which hit its lowest level in two months on fears of a drop-in demand for euro-zone bonds after rising yields on US bonds.
On the other hand, higher bond yields have led to weaken emerging market currencies. Against the Japanese yen, the dollar hit an 11-week high of 109.28.
Sterling remained stuck near its lowest level in nearly a month following Mark Carney, the Bank of England's governor last week, and markets will be looking for growth data for the British economy on Friday.
