The US dollar showed its dominance by surging higher against major currencies as markets entered the European session.
This is reflected in the movement of the dollar index which is heading for a six-month high of 105.70 against a basket of major currencies, at the time of writing.
This follows the hawkish statement of the Federal Reserve (Fed) last week which signaled that interest rates should remain higher for a longer period than initially expected.
The greenback's strengthening has put widespread pressure on major currencies, particularly the yen to fall to a near 11-month low of 148.57 during the European session.
Bank of Japan (BOJ) Governor Kazuo Ueda said this afternoon that it will not intervene directly in the currency market because such a move could cause it to violate agreements with the G7.
He further added that there are no signs of stable inflation on a sustainable basis, therefore the BOJ will patiently continue monetary easing under the current framework.
However, with the yen inching closer to the critical 150.00 level, investors are still hoping it could be the catalyst for fresh intervention to save the ninja currency.
Looking at other currencies, the euro slipped back lower after the latest data showed business confidence in Germany continued to be gloomy in September amid growing recession fears.
The European session also saw the 10-year German bond yield rise to its highest level since July 2011 at 2.78%.
In the meantime, the pound also fell further to a six-month low against the greenback after the Bank of England (BOE) left its interest rates unchanged last week.
In addition, the Aussie and New Zealand dollars remained in gloomy trade after erasing the gains recorded last Friday, while the Canadian dollar was flat.
