Bullish Dollar: Dollar strengthens on the backs of higher treasury yields.
The dollar rose earlier today as the U.S Treasury yields rose due to investors inflationary concerns as they anticipate the Federal Reserve’s meeting later this week.

At 07:55 GMT, the Dollar Index, an index that tracks the dollar against a basket of six other currencies, was up 0.2% at 91.817, recovering from the one-week low of 91.364 seen at the end of last week.
USD/JPY was up 0.2% at 109.23, EUR/USD fell 0.2% to 1.1928, after rising last week for the first time in three weeks, GBP/USD fell 0.1% to 1.3912, while the risk-sensitive AUD/USD dropped 0.4% to 0.7734.Traders are becoming wary of rising inflationary pressures on the back of the massive stimulus package, passed last week, and pent-up consumer demand as the COVID-19 vaccination campaign ends lockdowns in the U.S.
Benchmark 10-Year Treasury yields were at 1.62% on Monday, close to Friday’s top of 1.64%.
This will put the spotlight on the U.S. Federal Reserve’s two-day policy meeting, ending on Wednesday. Expectations are low that the central bank will announce major policy changes at its second meeting of the year, but it’s likely to raise its estimates of 2021 growth and inflation while making its first quarterly economic forecasts of the year.
We expect Jay Powell, the Fed chief, to be faced with a truck-load of inflation questions on Wednesday, and if he keeps referring to inflation being allowed to moderately overshoot, then we should expect long bond yields to continue up since inflation expectations will likely follow.
As an addendum, both the Bank of Japan and the Bank of England are also set to hold policy meetings later in the week.