The dollar index, which measures the greenback against a basket of six major currencies, was up 0.14 percent at 89.838, after hitting a one-week high of 89.998 earlier in the session. "Short-term Treasury (yields) have moved up fairly significantly overnight, reaching levels we had seen last during the Lehman crisis," said Sireen Harajli, a currency strategist at Mizuho in New York. "This higher push in yield has been beneficial for the dollar."
The yield on the two-year Treasury note was at 2.262, after hitting a nine-year high of 2.282 earlier in the day. The dollar sold off in recent months on worries that the Trump administration's recently passed tax cuts and plans for large government spending would expand the deficit and worries that the US government is pursuing a weak-dollar strategy.
The dollar index, which hit a more than three-year low of 88.253 last week, is up 0.8 percent this week, with analysts pegging part of the strength to profit-taking in other currencies. The euro has been driven by dollar weakness and then the recent recovery, but investors remain long on the currency in anticipation the European Central Bank will soon begin unwinding its balance sheet. The Canadian dollar weakened to a nearly two-week low against its US counterpart as oil prices fell.