The dollar (USD) reached its highest level in five months on Tuesday, as stronger-than-expected economic data caused investors to halt their bets on a rate cut in June, boosting the currency’s value.

However, fears of intervention by Japanese authorities halted the dollar’s gains against the yen, even as long-term yields on U.S. Treasuries, which the currency pair is often pegged to, made overnight jumps to two-week highs.

The dollar index (DXY) rose Tuesday to 105.1, its highest level since November last year, adding to Monday’s strong gains after U.S. data unexpectedly signaled the first expansion in the manufacturing sector since 2022.  It last stood at 104.92.

Meanwhile, the euro (EUR) fell to its lowest level since February at the end of the Asian session, but was last little changed at $1.0745. Data released on Tuesday pointed to a further worsening of the eurozone’s factory slowdown in the previous month.

The British pound (GBP) approached its lowest level since December, reaching $1.2563, just after data signaled an improvement in its manufacturing sector in the previous month.

Data from Monday’s U.S. ISM manufacturing survey illustrated a sharp rise in the sector’s price measure, raising caution that inflation will take time to return to 2%, possibly delaying the Federal Reserve’s (Fed) first interest rate cut.

Fed Chairman Jerome Powell mentioned Friday that the central bank was in no rush to lower borrowing costs after data showed a key measure of inflation rose slightly in February.

Japanese Yen

The Japanese yen (JPY) was trading at 151.67 per dollar, after dropping to 151.79. The currency has traded in a small range since hitting a 34-year low of 151.975 on Wednesday, prompting Japan’s monetary policy makers to increase intervention warnings.

Earlier on Tuesday, Finance Minister Shunichi Suzuki again said he would not highlight any options to respond to volatile currency movements.

Japan’s authorities had already intervened in 2022 when the yen slid to a 32-year low of 152 to the dollar.

The yen’s slide has come despite the Bank of Japan (BoJ) raising interest rates last month for the first time since 2007, with officials cautious about further tightening amid a fragile exit from years of deflation.

Other currencies

In other currencies, the Chinese yuan (CNY) touched four-and-a-half-month lows as dollar strength countered a sell-off in the U.S. currency by state-owned banks. The yuan hit a low of 7.2364 per dollar on the day, its lowest level since November of the previous year.

Meanwhile, the Swiss franc (CHF) hit its lowest level since November of the previous year at 0.909 per dollar. It has lost about 2.5% since the Swiss National Bank unexpectedly cut interest rates on March 21.