11:19 AM EDT, 04/10/2024 (MT Newswires) -- (Corrects day to Wednesday in the first paragraph)

The dollar was sharply higher Wednesday against all major trading partners after March CPI topped estimates, rising for a second month to a year-on-year rate of 3.5% and defying predictions by the Federal Reserve that cooler inflation would allow policymakers to reduce interest rates later this year.

Short-term Treasury yields surged more than 20 basis points as core services inflation ex-housing, also known as Supercore CPI, jumped to an annual rate of 4.8%. The Supercore component is a benchmark of price trends favored by Fed Chair Jerome Powell.

The report suggests the Fed will be required to maintain its policy rate at current levels while many of its central bank peers eye rate cuts late in Q2.

The dollar move sent the Japanese yen below 152.00 per dollar, a threshold considered to be a line in the sand for the Bank of Japan that could invite intervention to support the currency.

The broad-based dollar index rose 0.9% on the day to test year-to-date highs at 105.00.