LONDON: The US dollar hit a 3-1/2 month high on Monday as rising US Treasury yields spooked investors and boosted the greenback's safe-haven appeal.

After falling 4% in the last quarter of 2020, the dollar has strengthened by nearly 2.5% year-to-date as investors expect the broad rise in US bond yields to weigh on stretched equity valuations and boost demand for the US currency.

Recent economic figures are also supportive with US data showing non-farm payrolls surged by 379,000 jobs last month while the US Senate approved President Joe Biden's $1.9 trillion recovery package.

"The US labour market is healing quickly, President Biden's gargantuan relief package has been approved by the Senate, and America has stepped up its immunization game, administering a record number of vaccines this weekend," Marios Hadjikyriacos, an investment analyst at XM, said.

But while US yields climbed within striking distance of a one-year high above 1.62% hit on Friday, German yields dipped nearly 5 basis points last week, pulling the euro to a near four-month low below $1.19.

BofA analyst Athanasios Vamvakidis said the potent mix of US stimulus, faster reopening and greater consumer firepower was a clear positive for the dollar.

The dollar index stood at 92.30 against a basket of six major currencies, up 0.4%, its highest level since late-November.

The Australian dollar weakened 0.3% to $0.7658. The New Zealand dollar was down about 0.8%.

The currencies have been in demand because of their links to global commodities trading, but the dollar's bounce dented both.

The dollar held near a one-month high against the British pound, at $1.3819. Against the low-yielding yen JPY=EBS, the greenback held firmer at 108.56 yen, having hit a nine-month high of 108.645 on Friday.