The dollar rose to 15-day highs against the yen, boosted by sharp falls in commodity prices and hopes of further US interest rate hikes, though prospects of a euro zone rate hike next month prevented the euro from falling below last week's lows. Commodity prices have fallen sharply overnight, sparked in part by news that China may now tighten bank reserve requirements. HBOS currency analyst Steve Pearson said there are a number of reasons why falls in commodity prices would provide support to the dollar. Firstly, long positions in commodities are in effect short dollar positions, and there is therefore a direct dollar positive order flow when these are unwound, he said. In addition, falling commodity prices dent emerging market equity earnings, which will in turn slow the pace of central bank reserve diversification out of dollars. "We expect dollar gains to broaden and extend while risk assets remain under pressure," Pearson said. The main losers were the so-called 'commodity currencies', with the Australian dollar falling to 26-day lows against its US counterpart and the South African rand dropping to six-month lows. The yen also fell to 15-day dollar lows, in line with falls in other Asian currencies and losses on Asian stock markets. The euro's losses were more limited, however, and the currency failed to move below last week's low of 1.2694 usd, supported by the prospect of higher euro zone interest rates. The European Central Bank is fully expected to hike interest rates at its next meeting early next month, with a 50 basis point hike still seen as a distinct possibility. In contrast, a US rate hike next month is still far from being a done deal. "After the dollar's recent revival, the risk now is that the euro enjoys another rally unless US data or rhetoric quickly validates the market's growing expectation for a June hike," said Daragh Maher at CAYLON. Nevertheless, the dollar is continuing to benefit from growing expectations that a hike at the next meeting of US rate-setters on June 29 is now possible, whereas previously many had anticipated a pause next month.