The dollar headed on Thursday for its biggest monthly gain in almost a year, ahead of U.S. inflation data that could support many investors' growing belief that the Federal Reserve will need to raise rates at least once this year. The dollar hit a 13-month high against the euro on Wednesday, leaving the single European currency below $1.14. It also sent the pound to seven-month lows and kept the Japanese yen around its weakest in 40 years, near 161.79. Dollar strength has pushed gold briefly below $4,000 an ounce for the first time in more than seven months and sent bitcoin under $60,000 for the first time since 2024. The dollar index, which measures the U.S. currency against a basket of six others, was around 101.5 on Thursday, after touching a 13-month peak of 101.8 the previous day. Traders who before the U.S.-Israeli war on Iran had expected the Fed to cut rates this year, now see one hike as soon as October and a 50/50 chance of a second by year-end. This month alone, 2-year U.S. Treasuries, which track short-term rate expectations, have risen nearly 14 basis points to 4.15%, compared with just a 2-bp rise in benchmark German 2-year yields to 2.56% and a near-9 bp fall in UK gilt yields. Sterling was up 0.17% at $1.319, having hit its lowest since last November on Wednesday at $1.314. The dollar retreated against the Swiss franc to around 0.811 francs, just shy of 11-month peaks. On the data front, the Fed's preferred measure of inflation, core personal consumption expenditures, is due for May. Further gains could also push Japan to make good on its threats to intervene to support the yen, which traders think will come into play at levels around 162 per dollar or beyond.