The US dollar rose to a near 1-week high against a basket of currencies on Wednesday as investors' appetite for riskier currencies diminished and Treasury yields climbed. The lackluster corporate results, along with concerns over the economic outlook, contributed to the fading risk sentiment.

Tech giant Alphabet (GOOGL.O) reported disappointing revenue estimates for its cloud division, resulting in a slump in its stock price. This, coupled with other mega-cap stocks edging lower, was further exacerbated by the increase in US Treasury yields.

The dollar index, which measures the strength of the US dollar against a basket of six major currencies, reached its highest level in nearly a week.

Shaun Osborne, the chief foreign exchange strategist at Scotiabank in Toronto, attributed the rise in the dollar to weak risk appetite among investors. He noted, "Weak risk appetite seems to be driving broad USD gains."

Benchmark US 10-year Treasury yields slightly increased, resuming their climb towards a 16-year peak of 5.0%, which was briefly breached on Monday. The current 10-year yield stands at 4.9506%.

In recent weeks, the surge in US bond yields has captivated global financial markets, propelling the dollar index to its highest level in almost a year earlier this month. However, analysts believe there is limited capacity for yields and the dollar to continue extending their gains.

Osborne suggested that the dollar's recent strength against certain currencies provides an opportunity to fade some of its strength.

On Wednesday, data revealed a surge in sales of new US single-family homes to a 19-month high in September. However, the median house price experienced the largest drop since 2009, leading to concerns of curbed demand due to mortgage rates nearing 8%.

In currency markets, the Australian dollar initially surged after inflation rates exceeded expectations, fueling speculation about a potential hike in interest rates. However, the gains were eventually erased, and the Australian dollar traded down on the day.

The Canadian dollar weakened against its US counterpart after the Bank of Canada, as expected, held its key overnight rate at 5.0%. The central bank forecasted weak growth and left the possibility open for further rate hikes to manage inflation, which is expected to remain above target for the next two years.

The US dollar also maintained pressure on the yen, hovering near the closely watched 150 threshold, with traders closely monitoring any signs of intervention by Japanese authorities.

As global interest rates rise, pressure is mounting on the Bank of Japan to modify its bond yield control. There are discussions regarding the possibility of increasing the existing yield cap, which was set three months ago, in the lead-up to next week's policy meeting.

Cryptocurrency markets saw Bitcoin rise, holding near an approximately 18-month high reached on Tuesday. Speculation continues to fuel Bitcoin, with expectations of an imminent exchange-traded bitcoin fund contributing to its 15% increase for the week.

Overall, the US dollar's recent strength can be attributed to fading risk sentiment, lackluster corporate results, and rising Treasury yields. However, analysts remain cautious about the possibility of further gains, suggesting that opportunities may arise for certain currencies to counter the dollar's strength.