The US dollar on Monday rallied to its highest in nearly three weeks against a basket of currencies on rising expectations US monetary stimulus will be scaled back in the near term. The shift in sentiment has prompted investors to unwind bets that the Federal Reserve was not ready to end its bond-buying program, known as quantitative easing. The unwinding, however, could take months.
Though the dollar was not up across all pairs on Monday, it has been since Fed Chairman Ben Bernanke said last Wednesday that the US central bank could taper its monthly $85 billion in asset purchases if the economy continues to improve. The dollar index was up 0.2 percent at 82.514 after rising as far as 82.841, its highest since June 5. The gains added to last week's 2.2 percent rally, its biggest weekly rise since November 2011. In early afternoon trading, the dollar was down 0.1 percent at 97.79 yen, below an earlier peak of 98.70, its highest since June 11. The euro was last little changed at $1.3124. The euro also fell 0.2 percent to 128.19 yen.