The Dollar reached its highest level against the Yen since March 2017, as well as a 16-month high against the Euro, bolstered by robust economic data fuelling bets the Fed will hike rates sooner.

The greenback hit 114.975 Yen, before steadying at 114.82, whereas the Euro fell abruptly to $1.1263 for the first time since July last year, before trading down 0.2% at $1.12985, Reuters reports.

The Euro decline was heightened by stops triggered at $1.1290, according to Maybank senior FX analyst Christopher Wong. Yet the “big drivers” of the greenback’s recent rally are inflation and monetary policy, he added.

“For the majors, inflation is a driver of growing developed-market policy divergence in favour of USD,” Wong said. The Dollar’s gains will be “likely more pronounced against lower yielding majors such as JPY, EUR and CHF,” he stated.

The Dollar index – measuring the currency against six peers – increased 0.1% to 96.053, after previously reaching 96.266 for the first time since July last year.

Elsewhere, the Australian Dollar weakened to its lowest point in over a month, declining 0.21% to $0.72895 as wage growth data on Wednesday did little to influence the central bank’s dovish stance. Reserve Bank of Australia governor, Philip Lowe pushed back against market pricing for a rate rise in 2022, stating a move wasn’t justified considering recent data and predictions.

In contrast, the Pound held firm following the data on Tuesday revealing UK employers hired more people last month after the furlough scheme ended.

Traders will be analysing consumer data on Wednesday for additional support for Bank of England tightening. The Pound traded flat at $1.3424 after hitting an overnight high of $1.3472.