China's yuan fell to its weakest against the dollar since before the launch of its offshore market in 2010.
"A lot of the move with the dollar has to do with higher yields," said Christopher Vecchio, currency analyst at FXCM in New York. "It's a seismic moment for markets."
The dollar index was 0.98 percent higher at 100.04 after touching 100.20 earlier Monday, which was its highest since Dec. 3, 2015.
The benchmark 10-year Treasury note yield rose to 2.26 percent early on Monday, its highest since early January, while a bond market gauge on investors' 10-year inflation expectations climbed to its highest level in over two years.
U.S. yields have lifted European and Japanese yields as those economies continue to struggle with weak growth and inflation. This could force the European Central Bank and Bank of Japan to stick to their ultra-loose monetary policies for a longer period, analysts said.
The euro shed 1.13 percent at $1.0727 after hitting its lowest level against the greenback since Dec. 3, 2015, while the dollar gained 1.52 percent at 108.29 yen after rising to its strongest level since June 23.