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The dollar held firmly near three-month highs on Friday after surging overnight as Federal Reserve Chair Jerome Powell stuck with dovish rhetoric despite a recent spike in bond market volatility.

The U.S. currency soared the most in a month after Powell said the violent sell-off in Treasuries last week was “notable and caught my attention” but was not “disorderly” or likely to push long-term rates so high the Fed might have to intervene more forcefully.

Instead, he reiterated a commitment to maintain ultra-easy monetary policy until the economy is “very far along the road to recovery.”

Powell’s remarks reignited selling in Treasuries, with the benchmark 10-year Treasury yield jumping back above 1.5% and rising as high as 1.5830% in Asia. Last week, it had soared to a three-month top of 1.614%.

Riskier currencies including the Australian and New Zealand dollars slid along with stocks as investor sentiment again turned sour.

“Quite a night for market volatility, with the bond market the centre of attention,” Ray Attrill, head of forex strategy at National Australia Bank in Sydney, wrote in a client note.

“The market was seemingly looking for Powell to push back harder on the recent increase in yields.”

The dollar index was little changed at 91.660 early in the Asian session after gaining 0.7% overnight.

The euro slipped 0.1% to $1.19635, a one-month low, following a 0.7% slump overnight.

The dollar eased slightly to 107.835 yen, but remained near the multi-month high at the cusp of 108 touched during Thursday’s 0.9% surge.

The safe-haven dollar has been supported both by the higher Treasury yields themselves, and the upswing in risk aversion the bond rout has fomented.

Impending U.S. fiscal stimulus is adding fuel to expectations of higher inflation, as the accelerating rollout of COVID vaccines heightens optimism for an economic recovery.

While many analysts expect commodity-linked currencies to climb as economies reopen after the pandemic, they have been hurt by the souring mood.

The Aussie weakened 0.3% to $0.7705, extending Thursday’s 0.7% drop. The kiwi fell 0.2%, adding to its 0.8% slide overnight.

The dollar stood firm against its low-yielding peers on Tuesday on bets of a faster economic recovery and greater tolerance of higher U.S. bond yields, while the Australian dollar looked to guidance from the country’s central bank.

The dollar index last stood at 91.014, having hit a three-week high of 91.139 overnight, with its February peak of 91.600 seen as a possible next target.

The U.S. currency rose to 106.89 yen on Monday, its highest since late August, and last stood at 106.84 yen while the euro dipped to $1.2049, near its lowest level in almost two weeks.

The common currency was under pressure as top officials from the European Central Bank sounded alarm over rises in bond yields.

President Christine Lagarde said on Monday the ECB will prevent a premature increase in borrowing costs for firms and households.

Policymaker Francois Villeroy de Galhau was even more explicit, saying some of the recent rises in bond yields were unwarranted and that the ECB must push back using the flexibility embedded in its bond purchase program.

Traders were quick to sense the marked difference in tone between the ECB and the Federal Reserve.

Richmond Federal Reserve President Thomas Barkin said on Monday the uptick in long-term bond yields so far seems to suggest an adjustment to stronger growth and inflation outlook.

Atlanta Fed President Raphael Bostic said last week that bond yields remain comparatively low, while Federal Reserve Chair Jerome Powell has also shown no undue concerns about rising bond yields.

“Central banks continue to take diverging views on the signals sent by the recent rise in yields. The U.S. Fed is taking it as a positive signal,” Tapas Strickland, director of economics and markets at National Australian Bank in Sydney, said in a note.

The U.S. economic recovery is also seen on a firmer ground, already bolstered by prospects of a $1.9 trillion relief package from the Biden Administration and successful rollouts of COVID-19 vaccinations.

A survey by the Institute for Supply Management (ISM) released on Monday showed U.S. manufacturing activity increased to a three-year high in February amid a surge in new orders.

As a result, the gap between U.S. and European bond yields has been widening in a boost to the dollar; the 10-year yield differentials between U.S. Treasuries and German Bunds reached 1.76% on Monday, the highest in a year.

The safe-haven Swiss franc softened to a near four-month high of 0.9160 franc per dollar overnight and last stood at 0.9146.

Against the euro, the franc changed hands at 1.1023 to the euro, not far from a 1-1/2-year low of 1.1098 touched last week.

The Australian dollar traded at $0.7774, having risen 0.75% on Monday on rising risk appetite, with focus now squarely on the looming policy meeting of the Reserve Bank of Australia.

The RBA’s monthly policy meeting on Tuesday is widely expected to reinforce its forward guidance for three more years of near-zero rates.

It has stepped up bond buying following the global bond market rout, and any further warning against rising yields could cap its latest rebound, analysts said.

“The market has been in a euphoria for some time and everybody says the dollar will weaken on rising risk appetite. But oil prices dipped yesterday and gold also slipped. If commodity markets are waking up to the reality, then we could see some weakness in commodity-linked currencies,” said Makoto Noji, chief FX strategist at SMBC Nikko Securities.

Elsewhere, bitcoin also jumped back in tandem with gains in risk assets, trading at $49,129 and pulling away from Sunday’s three-week low of $43,021.

The U.S. dollar gained on Friday as U.S. government bond yields held near one-year highs, while riskier currencies such as the Aussie dollar weakened.

Yields have surged as an acceleration in the pace of vaccinations globally and optimism over improving global growth bolster bets that inflation will rise. That has also led investors to price in earlier monetary tightening than the Federal Reserve and other central banks have signaled.

The dollar move is “a function of what’s happening on the yields side,” said Jeremy Stretch, head of G10 FX strategy at CIBC World Markets. The 10-year yield briefly climbed above the S&P 500 dividend yield on Thursday, he noted, indicating “uncertainty that is writ large.” The dollar index rose 0.59% to 90.847, its highest level in a week.

It gained against the yen, touching 106.69 for the first time since September.

The benchmark 10-year Treasury yield surged above 1.6% on Thursday for the first time in a year after a weak seven-year note auction. It was last at 1.45%.

U.S. yield increases have accelerated this month as Fed officials refrain from expressing concern about the yield gains.

“The Fed has not really hinted that that’s making them uncomfortable, so the bond market’s going to push that,” said Edward Moya, senior market analyst at OANDA in New York. “That’s really dictating this move in the dollar.”

Riskier currencies retreated. The Aussie fell 1.99% to $0.7713, after topping $0.80 on Thursday for the first time since February of 2018.

Marshall Gittler, head of research at BDSwiss, said the Australian dollar was underperforming despite the market signaling higher growth, likely because the country’s central bank’s yield curve control policy would restrain its bond yields from moving much higher. That, in turn, could limit the attractiveness of the currency.

The greenback is likely to continue to benefit from safe- haven flows if risk appetite continues to worsen, and emerging market currencies may be among the biggest losers.

“There’s a big, big concern that this reflation risk is going to get out of hand and that’s going to really pummel the emerging market currencies, and I think you’re going to see that investors are going to need to reassess their dollar positions,” said Moya.

Data on Friday showed U.S. consumer spending increased by the most in seven months in January, while price pressures were muted.

U.S. jobs data for February released next Friday is the next major economic focus.

Investors are also waiting on details of the U.S. fiscal stimulus bill, which is expected to be passed in the coming weeks.

The Democratic-controlled House of Representatives on Friday was poised to push through President Joe Biden’s $1.9 trillion coronavirus aid package, although it looked unlikely to be able to use the bill to raise the minimum wage nationwide.

The euro dipped 0.79% to $1.2078 after touching a seven-week high of $1.2244 on Thursday.

Bitcoin fell 0.32% to $46,946. Ethereum dropped 0.7% to $1,468.

The dollar remained at multi-year lows against the Antipodean currencies and held near a one-month low versus the euro as reflation trades gripped the currency markets on Wednesday.

Federal Reserve Chair Jerome Powell reiterated on Tuesday that U.S. interest rates will remain low and the Fed will keep buying bonds to support the U.S. economy. The dollar resumed its decline towards the lows recorded at the start of the year after a brief rally in late January.

Money flowed from safe havens like the dollar, Swiss franc and the Japanese yen towards currencies expected to benefit from a pick-up in global trade, and to countries like Britain that are recovering quickly from the coronavirus pandemic.

“The extension of weakness in safe haven currencies such as the Swiss franc appears consistent with building confidence in the global economic recovery,” MUFG strategists said in a note.

Some notable moves were seen in the currency markets this week. The franc weakened below 1.10 francs per euro for the first time since the end of 2019, with a global rise in bond yields also curtailing the appeal of the safe-haven currencies.

The dollar’s weakness in recent days has been more remarkable as it comes against the backdrop of a broader rise in U.S. yields. Benchmark 10-year borrowing costs are holding near their highest in nearly a year.

The dollar index against a basket of six major currencies was at 90.111, near the six-week low of 89.941 it reached overnight.

“Risk appetite has improved a lot, and this leaves the dollar at a big disadvantage,” said Junichi Ishikawa, foreign exchange strategist at IG Securities.

The Australian dollar, which tends to benefit from rising metal and energy prices, rose to a three-year high of $0.7945 before paring gains to trade 0.1% stronger at $0.7914.

The euro bought $1.21495, close to the one-month high of $1.2180 set overnight. The British pound climbed past $1.42 overnight for the first time since April 2018.

The dollar nursed losses near a six-week low on Tuesday while commodity currencies loitered around multi-year highs, as investors’ focus shifted to how U.S. Federal Reserve chief Jerome Powell might respond to resurgent inflation expectations.

Surging prices for materials from oil and copper to lumber and milk powder have pushed currencies such as the Australian and New Zealand dollars to their highest in nearly three years.

However the gains have come with a worldwide rise in inflation expectations and a big sell-off in longer-dated bonds.

Traders expect Powell, who testifies before Congress at 1500 GMT, to provide some reassurance that the Fed will tolerate higher inflation without immediately hiking rates, which they said could calm bond markets and eventually weigh on the dollar.

“I think he will talk up the downside,” said Commonwealth Bank of Australia currency analyst Joe Capurso in Sydney.

“If anything, I think he will give markets a bit of a cold shower and say: ‘Mr Market you’re getting a bit ahead of yourself. There are plenty of risks…and the U.S. economy is long, long way from full employment.’”

Morning moves were slight ahead of his appearance, but renewed confidence that low U.S. interest rates will not lift anytime soon can likely clear the way for further gains in trade-exposed currencies at the dollar’s expense.

The U.S. dollar index sat at 90.019 on Tuesday, just above its lowest since mid January. The Australian dollar last bought $0.7913 and the kiwi $0.7323, with both trading broadly steady early in the Asia session.

The euro made a small gain to $1.2165 and is poised to re-test resistance around $1.2220.

Sterling, which has rallied nearly 3% this year as a speedy vaccine rollout has inspired confidence in the prospect of a British economic rebound, held above $1.40 at $1.4067.

The Japanese yen, which has been the worst performing major currency of 2021 because it is sensitive to tumbling U.S. Treasury prices, steadied at 105.02 per dollar.

Elsewhere bitcoin steadied above $50,000 after a wild overnight ride where it traded in a $10,000 range and dropped as low as $47,400.

The U.S. dollar fell to a three-year low against its Australian counterpart and teetered near three-year low against the British pound as progress in curbing coronavirus infections boosted sentiment for riskier assets.

The greenback also slipped toward a three-year low against the New Zealand dollar as traders sought currencies with close ties to the global commodities trade due to an improving economic outlook.

The U.S. currency, which is often considered a safe asset during times of uncertainty, is likely to fall further as more investors focus on economic recovery once the worst of the coronavirus pandemic passes.

“Commodity currencies and the pound are particularly strong against the dollar, and this trend looks set to continue,” said Yukio Ishizuki, foreign exchange strategist at Daiwa Securities.

“Britain’s vaccination programme is making a lot of progress. Economic activity is gradually returning to normal in many places, which puts some pressure on the dollar.”

The Australian dollar hit $0.7892, its highest since March 2018 while the New Zealand currency rose to $0.7315, its strongest since April 2018.

Vaccine rollouts will ease risks to Australia’s economy over the year, ratings agency Fitch said on Monday when it maintained the country’s top AAA credit rating, albeit with a negative outlook.

The euro last traded at $1.2124

The British pound bought $1.4030, close to a three-year high.

Against the yen, the dollar held steady at 105.45

Australia on Monday began its mass COVID-19 vaccine program as the country looked set to report no local cases for the third straight day, which gave the Aussie a boost.

Sterling is also in focus because British Prime Minister Boris Johnson will plot a path out of coronavirus lockdowns later on Monday, aided by one of the fastest vaccine rollouts in the world.

Dollar net short positioning fell last week to $29.09 billion, which is the lowest level since mid-December, according to calculations by Reuters and Commodity Futures Trading Commission data.

U.S. dollar net shorts have fallen for four straight weeks, which shows that there are still some investors who are optimistic about the greenback.

Long-term Treasury yields have been rising recently, and the United States has also improved its response to the coronavirus, which will lend the dollar some mild support, Daiwa’s Ishizuki said.

In the cryptocurrency market, bitcoin eased slightly to $57,090, but was still near a record high as the digital asset gains more mainstream acceptance.

Ether, a rival cryptocurrency, fell to $1,918.

The U.S. dollar maintained its biggest loss in 10 days on Friday after disappointing U.S. labor market data bruised optimism for the country’s speedy recovery from the COVID-19 pandemic.

The greenback continued to buck its traditional role as a safe-harbor currency, falling in sympathy with U.S. stocks overnight after an unexpected increase in weekly jobless claims soured the economic outlook.

The British pound traded near an almost three-year high reached overnight, when it surged the most in more than a month, amid Britain’s aggressive vaccination program.

The dollar index was little changed at 90.584 early in the Asian session, after a 0.4% decline overnight cut short a two-day winning streak. For the week, the gauge is now back to more or less break-even.

The string of soft labor data is weighing on the dollar even as other indicators have shown resilience, and as President Joe Biden’s pandemic relief efforts take shape, including a proposed $1.9 trillion spending package.

“The prospect of a massive U.S. fiscal stimulus plus a successful vaccine roll-out are solid arguments to bet on a U.S. recovery this year,” Rodrigo Catril, senior foreign exchange strategist at National Australia Bank in Sydney, wrote in a client note.

“But the overnight jobless claims data serve as a reminder of the unevenness of the recovery so far.”

Sterling was mostly flat at $1.3965 on Friday following a 0.8% jump in the previous session, when it rose as high as $1.3986 for the first time since April 2018.

The euro was little changed at $1.2089 after rising 0.4% overnight.

The dollar bought 105.695 yen, little changed following a two-day retreat from the five-month high of 106.225 reached Wednesday.

In cryptocurrencies, bitcoin continued to hover around $51,500, consolidating after hitting a record $52,640 on Wednesday in a rally fueled by endorsements from Tesla Inc <TSLA.O> and others. It has risen about 78% so far in 2021, after more than quadrupling last year.

Smaller rival ethereum rose to a record $1,951.89 on Friday, just pipping the previous day’s high. It has surged some 162% this year.

On Thursday, chipmaker Nvidia Corp announced a new processor designed specifically for mining ethereum.

The dollar held its ground on Thursday after its first back-to-back gains in two weeks as upbeat data bolstered expectations that the U.S. economy would recover from the coronavirus pandemic faster than most of its peers.

Bitcoin traded just shy of the new record high of $52,640 reached overnight, with its roughly 58% surge this month prompting some analysts to warn that the rally might be unsustainable.

Government stimulus checks helped U.S. retail sales rebound sharply in January, while industrial output and producer prices data also provided robust upside surprises.

Investors expect a further boost from Joe Biden’s proposed $1.9 trillion COVID-19 relief package, with the president meeting top labor leaders on Wednesday to drum up support for the plan.

Meanwhile, minutes from the Federal Reserve’s policy meeting last month reinforced the central bank’s willingness to let the economy run hot while keeping monetary settings ultra-accommodative.

“Biden’s stimulus plans, a steep decline in new infections and rapid vaccine rollout leave the U.S. well positioned to recover sooner than most,” Westpac strategists wrote in a client note.

“That will generate periodic bouts of USD upside.”

However, like many analysts, Westpac’s team expects the dollar to decline this year, weighed by the Fed’s relentless money printing.

The dollar index was little changed at 90.943 on Thursday in Asia after strengthening 0.2% overnight and 0.4% on Tuesday.

The gauge has gained about 1% this year, rebounding from an almost 7% slide in 2020 that extended to a 2-1/2-year low of 89.206 in early January.

Westpac recommends fresh dollar index shorts on rallies toward 91.0.

The euro was little changed at $1.20385 after sliding 0.5% overnight, the most in two weeks.

The dollar was almost flat at 105.845 yen, following a pullback Wednesday after reaching a five-month high of 106.225.

Treasury yields have given the dollar a boost in recent days, with the yield on the benchmark 10-year note rising as high as 1.333% overnight from around 1.20% at the end of last week. It pulled back in Asia on Thursday to 1.2669%.

“Rising U.S. yields have stopped the dollar from declining for now,” said Osamu Takashima, the Tokyo-based head of G10 FX strategy at Citigroup Global Markets Japan.

“In the longer term, we remain bearish on the U.S. dollar: we expect a risk-on environment globally and under such circumstances we think downward pressure on the U.S. dollar could revive.”

Takashima expect the dollar to rise to as high as 107 yen before slumping to 102 over the next three months.

The dollar advanced on Wednesday, hitting a four-month high against the yen as U.S. bond yields jumped on the prospects of further economic recovery and a possible acceleration in inflation.

Bitcoin held firm, a day after the cryptocurrency hit $50,000 for the first time, bringing its total market capitalization to more than $900 billion, as traders bet on its further acceptance among major companies.

The dollar’s index against six other major currencies jumped back to 90.681, from a three-week low of 90.117 hit on Tuesday

Boosting the dollar was soaring U.S. bond yields, with the 10-year yield rising to 1.331% from around 1.20% at the end of last week.

“The move up in yields has been driven by increasing inflationary concerns amid a rise in energy prices along with the prospect of a big U.S. fiscal stimulus and the global recovery entering a more solid stage as vaccine roll out lead to the reopening of economies,” said Rodrigo Catril, senior FX strategist at National Australia Bank in Sydney.

The yen, which is sensitive to U.S. yields, reacted the most with the dollar jumping to a four-month high of 106.225 yen. It last stood at 106.13 yen.

“I think the dollar’s downtrend is over. At the start of the year, speculators were betting on a fall in the dollar below 100 yen. They seem to have abandoned such a view now,” said Yukio Ishizuki, senior strategist at Daiwa Securities.

The euro slipped slightly to $1.2085 though its fall was less pronounced due to its gains earlier on Tuesday following strong German economic sentiment data.

The New York Federal Reserve’s Empire State manufacturing report released on Tuesday offered an upbeat economic picture, with a rise in its “prices paid index” stoking fear of faster inflation.

That optimism was echoed by St. Louis Fed President James Bullard, who told CNBC that U.S. financial conditions were “generally good,” and that inflation was likely to heat up this year.

San Francisco Fed President Mary Daly, however, said pressures on inflation are still downward, pushing against critics warning low interest rates and government spending could overheat the U.S. economy and spark high inflation.

“Her comments are not resonating with market players preoccupied with inflation at this point,” said Daiwa’s Ishizuki.

The positive mood on the economic outlook is underpinning risk-sensitive currencies.

The British pound held firm at $1.3863, having reached its highest level since April 2018 on Tuesday. Against the euro, the pound traded at its highest level since early May at 87.07 pence per euro.

The Australian dollar stood at $0.7734, down slightly but still not far from Tuesday’s one-month high of $0.7805.

The offshore Chinese yuan also stepped back after hitting a 2-1/2-year high of 6.4010 per dollar and last stood at 6.4269.

The U.S. dollar was pinned down on Tuesday, as vaccine optimism boosted the British pound to an almost three-year high, while rising oil prices and buoyant expectations for global recovery supported commodity and trade-exposed currencies.

In trade thinned by Lunar New Year holidays in China and Monday’s U.S. holiday, the positive mood also weighed on the safe-haven yen which made a one-week low on the dollar overnight and fell to more than two-year lows on the euro and the Aussie.

The U.S. dollar index, which measures the dollar against a basket of six major currencies, sat at 90.351, not far above a two-week low it struck last Wednesday.

The Chinese yuan, a favored vehicle for playing the dollar’s weakness in Asia, was on the brink of strengthening past 6.4 per dollar for the first time since mid-2018 and last stood at 6.4033 in offshore trade.

The risk-sensitive Australian dollar held near Monday’s one-month high at $0.7785.

“The dollar tends to underperform when you see this broad positive sentiment in markets,” said Rodrigo Catril, senior currency strategist at National Australia Bank in Sydney.

“There are also inflationary pressures particularly coming from energy prices,” he said, which is pushing up nominal yields — adding another weight on the yen as that can attract flows from Japan — but keeping real returns on Treasuries steady.

Bitcoin hovered just short of $50,000 as profit taking paused the cryptocurrency’s steep rally that has carried it more than 60% higher in 2021 so far.

The yield on benchmark ten-year U.S. Treasuries <US10YT=RR> leapt five basis points to 1.2501% in early Asia trade on Monday, while most major currencies were steady.

Sterling, which broke past $1.39 for the first time in almost three years on Monday, held at $1.3912. It also held steady at 87.15 pence per euro, its highest since May 2020.

Sterling has gained as much as 2.5% on the dollar in less than two weeks as the aggressive rollout of Britain’s COVID-19 vaccination programme has raised expectations its economy will be able to recover more swiftly than European peers’.

The euro was steady at $1.2132 on Tuesday while the yen, which has dropped 2% so far this year, nursed losses at 105.36 per dollar. The yen also hit its lowest since late 2018 against the euro and the Australian dollar and hit a three-year low on the Swiss franc.

“The yen has been the worst performing currency of 2021, with its negative correlation to U.S. Treasury yields proving to be the biggest dampening factor,” said Francesco Pesole, currency strategist at Dutch bank ING in a note to clients.

“When adding weak safe-haven demand as the global recovery gathers pace, some additional trimming of yen net long positions may be on the cards.”

Ahead on Tuesday, investors are looking to eurozone growth estimates, a German sentiment survey and U.S. manufacturing data to gauge the relative pace of the world’s pandemic recovery.