The U.S. dollar held near a fourmonth high on Monday as rising U.S. Treasury yields fuelled demand for the greenback and prompted hedge funds to cut bearish positions.

Turkeys shock weekend decision to replace its hawkish central bank governor also supported the dollars safehaven appeal.

Markets have been slow to catch on to the rising dollar theme in recent weeks as investors had bet that a global economic recovery would prompt buying of riskier currencies.

But rising U.S. Treasury yields and the prospect of more lockdowns in several euro zone countries has driven a widespread unwinding of short dollar bets.

Speculators finally capitulated to dollar strength, said Marshall Gittler, head of investment research at BDSwiss.

Though benchmark U.S. Treasury yields declined on Monday, yields on 10year U.S. Treasury debt have risen for seven consecutive weeks.

As a result, traders cut their long euro bets to their lowest levels since June 2020 while net positions against the Japanese yen flipped into positive territory for the first time in more than a year, latest positioning data showed.

LIRA SLIDES

Worries that Turkish market upheaval would spill into others also supported the dollar, especially against currencies like the Australian dollar and Norways crown.

The Turkish lira stood at 7.9600 per dollar, down nearly 10 from its Friday close. At one point the lira fell by as much as 14.9 to 8.4850, close to a record low of 8.5800.

Other emerging market countries are…