© Reuters. FILE PHOTO: A picture illustration shows U.S. 100 dollar bank notes

By Kevin Buckland

TOKYO (Reuters) – The dollar extended its rebound from near three-year lows versus major peers on Thursday, supported by higher U.S. yields, as President-elect Joe Biden prepared to outline his plans for massive fiscal stimulus.

The held onto gains made on Wednesday in early Asian trading as investors continued to unwind bearish bets. The dollar has risen in four of the past five trading sessions as the prospect of more stimulus has weighed on U.S. government bonds, sending the benchmark Treasury yield above 1% for the first time since March.

also held on to 10% gains made on Wednesday as it rebounded after sliding almost $12,000 from an all-time high of $42,000 hit last week.

Biden will give details on Thursday of a plan for “trillions” of dollars in pandemic relief. Expectations that more stimulus will fuel faster growth has lifted U.S. yields, which in turn supported the dollar.

However many analysts expect the currency’s bounce to be temporary, as a build up of bearish dollar positions are shaken out. Longer term, they expect more U.S. stimulus to support risk sentiment, weighing on the greenback, which is traditionally considered a safe-haven.

“I think positioning in risk assets is becoming a concern, so there could be a squeeze in the dollar near-term,” said Shusuke Yamada, chief Japan FX strategist at Bank of America (NYSE:) in Tokyo.

“I am focusing on gradual dollar weakness in 2021.”

FX speculators have been net short the dollar since mid-March, as investors’ surging appetite for riskier assets hurt demand for the greenback.

The dollar index traded little changed at 90.292 after adding 0.3% overnight. It fell as low as 89.206 on Jan. 6 for the first time since March 2018.

The euro was largely steady at $1.2164 after sliding 0.4% on Wednesday.

The greenback was little changed at 103.925 yen, following a 0.1% rise previously.

Bitcoin was 0.6% higher at $37,655 on Thursday, up from as low as $30,261.13 on Jan. 11.

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