Investing.com - The dollar extended gains against the other major currencies on Tuesday, rising to eight-year highs against the yen boosted by expectations for higher U.S. interest rates later this year.
USD/JPY hit highs of 122.81, the most since July 2007 and was last at 122.76, up 0.98% for the day.
The greenback strengthened across the board after Fed Chair Janet Yellen reiterated Friday that the bank still expects to start raising interest rates later in the year if the economy continues to improve as expected.
She attributed a slowdown in first quarter growth to "transitory factors", including a harsh winter, but reiterated that the timing of an initial rate hike would be data dependent.
The greenback received an additional boost after data on Friday showing that underlying inflation in the U.S. rose for a third straight month in April.
The dollar’s gains came as markets reopened following a long holiday weekend, after markets in the U.K., Germany and the U.S. remained closed on Monday.
Investors were turning their attention to U.S. data on durable goods orders later Tuesday for a fresh indication on the strength of the economy.
The euro was at one-month lows against the greenback, with EUR/USD down 0.76% to 1.0893.
The euro remained under heavy selling pressure as the prospect of a Greek default continued to weigh.
Athens has warned that the country would be unable to make a €305 million payment to the International Monetary Fund due on June 5 if a cash-for-reforms deal with its international lenders is not reached by then.
The pound and the Swiss franc were also weaker, with GBP/USD down 0.47% to 1.5397 and USD/CHF advancing 0.62% to 0.9508.
The commodity linked currencies were broadly lower, with AUD/USD sliding 0.56% to 0.7779 and NZD/USD losing 0.45% to trade at 0.7276.
USD/CAD was up 0.26% to 1.2344.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at five-week highs of 97.12.