Asian currencies consolidated against the dollar in early trade as Treasury yields rose on expectations of Federal Reserve rate increases. MUFG Bank noted that oil prices are adding another layer of pressure to the rates story. The dollar strengthened against most Asian peers, with the Japanese yen weakening to 145.20 per dollar.

The Chinese yuan traded at 7.25 per dollar, while the South Korean won fell to 1,350 per dollar. Traders are watching for further signals from Fed officials, with markets pricing in a 50 basis point rate hike in the coming months. The yield on the 10-year U.S. Treasury note climbed to 4.2%, its highest level since 2008.

Energy prices also contributed to the market sentiment, with Brent crude rising above $90 a barrel. The combination of rising yields and higher oil prices is creating a challenging environment for Asian currencies, which are sensitive to both factors. Analysts suggest that the dollar's strength may persist if the Fed continues its aggressive tightening path, potentially putting further pressure on emerging market currencies across the region.