The dollar gained reaching a five-month peak against the yen and the two-month high against the European currency on anticipation of a rise in yields on Treasury notes.

"The dollar’s trend is clearly bullish as it’s no longer reacting to negative news," said Yoshiharu Yanagisawa, head of forex trading at State Street in Tokyo.

Yields on U.S. Treasury 10-year notes are expected to rise as markets look to Federal Reserve Chairman Alan Greenspan to voice concerns over rising inflation in the US. Rates are projected to gain to anticipate a quicker rise in the Fed funds rate that can add a whole half-point instead of «measured» quarter-point increases if Fed officials get worried about inflation rising.

Now the market expects leads from Federal Reserve Chairman Alan Greenspan who could direct investors by offering hints in his three speeches expected this week.

His first appearance will be via satellite when he will talk to the National Petrochemical and Refiners Association’s International Petrochemical Conference in San Antonio, Texas, addressing energy issues.

The next day he will speak to the Senate Banking Committee on the proposed reform of overnment-sponsored enterprises, or GSEs.

The week will be concluded by Greenspan’s talk on consumer finance at a Fed-sponsored community affairs conference in Washington.

Last month the US government reported a 2.4% rise in consumer price index excluding food and energy in February from its level in February 2004, which was the steepest rise since August 2002.

William Poole, president of the Fed’s St. Louis branch, added to concerns about inflation saying that he seeing increasing evidence that the companies can now raise prices.

The yen can be expected to trade at levels approaching 110 yen per dollar, analysts predict based on obvious slowdown in the Japanese economy and rising US interest rates, as the market seems to ignore previously touted problems such as US budget deficits.