The US dollar once again surged to a new 10-month high in the European session, continuing to gain support from stronger US bond yields.
This was reflected in the movement of the dollar index which reached 106.20 against a group of major currencies, before paring gains at 105.97 at the time of writing.
Expectations for the Federal Reserve (Fed) to continue its monetary tightening continued to support 10-year US bond yields to firm at a 16-year high.
On Monday, Fed policymaker Neel Kashkari said that interest rates will rise and remain high for longer until inflation falls back to the central bank's 2% target.
Tracking the movements of other currencies, the Aussie dollar is back near its lowest level for the year, dampened by gloomy sentiment on China.
Chinese real estate giant Evergrande continues to face problems after its major subsidiary Hengda Real Estate defaulted on 4 billion yuan ($547 million) in debt on Tuesday.
This shows that China's real estate market will continue to disrupt the economic recovery of the world's second largest economy.
Meanwhile, the euro touched a new six-month low at the opening of the European session, weighed down by fears of a recession in the Eurozone.
Additionally, the pound extended its slide and hit its latest low since March amid the Bank of England's (BOE) policy stance turning dovish.
Meanwhile, the yen finally touched the 149.00 level for the first time since October 2022, as investors remained on guard over the possibility that the Bank of Japan (BOJ) would intervene.
