Both the euro and sterling fell today as concerns resurfaced that interest rate hikes from major central banks to contain inflation run the risk of a sharp global growth slowdown or recession.

Data showing UK consumer price inflation hit a new 40-year high at 9.1% sent sterling down almost 1% to a near one-week low of $1.2162, before it trimmed some of those declines.

With investors turning nervous again about global growth prospects, the safe-haven US dollar gained ground on most peers.

Meanwhile, the yen hit a fresh 24-year low as rising US and European bond yields contrasted with low Japanese interest rates.

"Recession fears are growing as central bankers slow demand to curb inflation. Pro-cyclical currencies are on the back foot and the dollar remains very much in demand," said Chris Turner, global head of markets at ING.

Mike Bell, global market strategist at JP Morgan Asset Management, said as real wages are already being squeezed by higher prices in Britain, increasing borrowing costs further "could feel like rubbing salt in the wound" and elevate the risk of a recession.

Today's other main event is the start of US Federal Reserve Chair Jerome Powell's two-day testimony to Congress.

Investors are looking for further clues on whether another 75 basis point rate hike is on the cards at the Fed's July meeting.

The dollar index was 0.05% higher at 104.5. The euro fell 0.1% to $1.0524.

The yen was last 0.65% higher at 135.96 per dollar, having hit 136.71 in early trade, its lowest since October 1998.

Analysts see no immediate end to a sell-off that has seen the yen weaken 18% this year from 115.08 at the end of 2021.

The currency has been weakening as higher energy prices put pressure on Japan's current account and because of the ever- widening gap between yields on Japanese government bonds and US Treasuries.