The dollar staged its biggest rally in three weeks, driving it to the strongest against its key counterparts since December, as expectations that the Federal Reserve will hold interest rates high well into next year draws cash into the US.

The Bloomberg Dollar Spot Index gained 0.4% during Monday’s trading session in New York, pushing it back above this year’s previous high. The yen fell to its lowest against the US currency since October, the euro slid as much as 0.7% to its lowest level since March, and the Swiss franc hit its weakest level since May.

The dollar’s rise, the fourth straight daily gain, was fueled by indications from the Fed last week that it plans to keep rates elevated as the surprising strength of the economy leaves inflation the central bank’s predominant concern. That’s highlighting the difference between the US and countries elsewhere around the world where growth is sputtering under the weight of tighter monetary policy.

“There is simply a lot of optimism priced into the US dollar,” Esther Reichelt, a foreign exchange strategist at Commerzbank AG in Frankfurt, said on Bloomberg Television. “This was supported by the Fed’s view, which basically said that even if we are seeing a cooling of economic dynamics, this will not slip through to the labor market.”

The dollar is being supported by the rise in Treasury yields since the Fed’s Sept. 20 meeting, which has given investors an incentive to move money to the US. On Monday, the yield on 10- and 30-year Treasuries rose to multi-year highs, with traders recalibrating the Fed’s path after it indicated it’s unlikely to ease monetary policy next year by as much as markets had previously anticipated.

“Central banks are mostly consistent in messaging —- that they’re basically at, or close to,” peak rates, said Bipan Rai, CIBC’s global head of foreign exchange strategy in Toronto. But, he said, the US economy hasn’t been affected nearly as much as other countries where mortgages with adjustable rates have squeezed households.

--With assistance from Robert Fullem.

(Updates euro move and chart, adds franc)