TOKYO: The euro hit a more than three-week high against the dollar on Monday and the pound hit its highest level this month as European Central Bank officials argued for further tightening aggressive currency.

The greenback slowed not far from a two-week low ahead of key U.S. inflation data this week that could lead the Federal Reserve to consider slowing the pace of rate hikes at its March 21 policy meeting. september.

The rate-sensitive Japanese yen found its way around the midpoint level of 142 to the dollar as long-term US Treasury yields halted their rise below a nearly three-month high.

The euro surged as high as $1.0130 at the start of the penultimate Asian day, trading 0.19% stronger than Friday at $1.0066.

The British pound rose to $1.1681 and was last up 0.24% at $1.1611.

ECB policymakers see a growing risk that the key rate will need to rise to 2% or more to rein in record inflation, sources told Reuters.

In an interview with German radio over the weekend, Bundesbank President Joachim Nagel said that if the consumer price situation does not change, “further clear steps must follow”.

The dollar index, which measures the currency against six major peers, was little changed at 108.82, holding near those levels after falling from a two-decade high hit on Wednesday. It dipped to the lowest since August 30 at 108.35 in the previous session.

Investors wary ahead of Tuesday’s U.S. CPI report, even as Fed officials continued their hawkish rhetoric on Friday, the last day for such comments before a blackout period ahead of Federal Open Market Committee deliberations .

Fed Governor Christopher Waller said he supports “a meaningful hike at our next meeting,” while St. Louis Fed President James Bullard reiterated his call for a 75% hike. basis points.

“Officials have made clear the need for the FOMC to continue raising interest rates until there is compelling evidence that inflation is falling,” wrote Joseph Capurso, strategist at the Commonwealth Bank of Australia, in a client note.

“Regardless of the outcome of the CPI report, we believe the FOMC still has a lot of work to do,” which means more upside for the dollar in the short to medium term, he said.

The dollar was steady at 142.71 yen, after pulling back from a 24-year high at 144.99 since Wednesday.

It came as the benchmark 10-year US Treasury yield, which the currency pair often follows closely, slowed an ascent that took it to the highest since mid-June at 3.365% on the week. last. It has changed little since Friday at around 3.315% in Tokyo trading.

Meanwhile, Japanese officials again hinted at intervention, with a government spokesman saying in a local television interview that the administration should take necessary steps to counter excessive yen declines.

However, analysts doubt such a measure would work without the support of the Fed and other central banks, given that the Bank of Japan is the only one among developed markets to stick to an ultra-accommodative policy.

“A coordinated effort is needed and at present, with major central banks battling inflation through tighter policy, global official support for the JPY seems unlikely,” wrote Strategist Rodrigo Catril. National Australia Bank, in a note.

“If the BOJ really wants to stop the JPY’s decline, then it needs to make changes to its ultra-easy policy,” he added. “The pressure is mounting.”

Elsewhere, the Australian dollar edged down 0.04% to $0.6844, while the New Zealand kiwi gained 0.11% to $0.6110.

Bitcoin, the main cryptocurrency, fell 0.85% to $21,650, finding its way around that level after rebounding from an almost three-month low at $18,540 last week.