The US dollar rose to its highest level in 20 years against other major currencies on Monday after Federal Reserve Chairman Jerome Powell indicated that interest rates would remain high for longer to curb escalating inflation.

The dollar index, which measures the value of the US currency against a basket of other currencies, climbed to a new peak not reached in two decades at 109.48.

This left European currencies in a stagnant state despite the European Central Bank's hawkish statements, which reinforced expectations of an interest rate hike in September.

The euro fell 0.25% in early European trading to $0.99415, near its lowest level in 20 years, while the pound sterling dropped to its lowest level in two and a half years.

London markets were closed due to a public holiday.

Powell said before a central bank seminar in Jackson Hole, Wyoming on Friday that the Federal Reserve would raise interest rates to the highest necessary level to restrict growth, and keep them at this level "for some time" to reduce inflation, which has reached more than three times the Fed's target rate of two percent.

US Treasury yields rose, with two-year bond yields reaching their highest level in 15 years at about 3.49%, contributing to strengthening the dollar index.

The dollar rose 0.8% to 138.81 yen after reaching its highest level since July 21, while the yuan fell to its lowest level in two years at 6.9321 per dollar.

The pound sterling fell to its lowest level in two and a half years at $1.1649 before finally falling 0.5% to $1.1676.

With risk aversion dominating global markets, the Australian and New Zealand dollars were negatively affected by selling pressure.

The Australian dollar fell to $0.6838, its lowest level since July 19, while the New Zealand dollar retreated to its lowest level since mid-July at $0.61.

Regarding cryptocurrencies, Bitcoin regained some of its value but remained below the $20,000 level.