The Dollar rose to a 24-year high against the Yen on Thursday as investors prepared for higher interest rates in the U.S.

USD reached 139.69 Yen in Asian trade, a level not seen since 1998, after rising around 0.5% on Wednesday’s close. It last edged up 0.17% to 139.2 Yen.

“The main driver remains rate differentials between Japan and the U.S., and even today's price action just follows the overnight move higher in U.S. rates. We think the path ahead is going to depend on how U.S. rates behave,” said Sosuke Nakamura, a JPMorgan strategist in Tokyo.

Forecasts of a 75-basis point rate hike in the U.S. at the Fed meeting later this month are mounting following strong economic data. Fed funds futures last indicated a 75% chance of a 75bps rise, Reuters reports.

This helped to drive the yield on benchmark 10-year U.S. Treasuries to 3.219% earlier in the week. As it stands, Japan’s 10-year government bond yield is just 0.24%.

In addition, the rising Dollar also pinned down other major peers. The Euro declined 0.3% to stay above parity at $1.00235, whilst both the Australian and New Zealand Dollars hit their lowest levels since July. They subsequently trimmed losses, with the Aussie down 0.18% at $0.6831, and the Kiwi 0.24% lower at $0.6105.

Elsewhere, Sterling fell 0.16% to $1.16015, having rallied from a fresh two and a half-year dip of $1.1570 hit earlier in the session. During August, the Pound lost 4.6%, the sharpest monthly drop since October 2016, the Reuters report adds.

“The high inflation and (the) gas supply are still major issues in both the euro zone and the UK, and I think it's going to keep downward pressure on both those currencies,” said Joseph Capurso, Commonwealth Bank of Australia’s head of international economics. “I can see the Euro going back below parity again quite soon.”