NEW YORK (MarketWatch) — The U.S. dollar outperformed most major peers on Tuesday as data showed Americans are the most confident about economic prospects in five years.

The ICE dollar index DXY, -0.05% , which measures the greenback’s movement against six other major currencies, rose to 84.266 from 83.700.

The WSJ Dollar Index BUXX, -0.01% , a gauge of the currency’s moves against a slightly wider basket, rose to 75.84 from 75.25.

The greenback also notched gains against the yen, marking a break in the yen’s recent gains tied to concerns about a climb in Japanese government bond yields. The dollar USDJPY, +0.07% bought ¥102.31, up from ¥101.09 late Monday.

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The dollar rose on the heels of U.S. consumer-confidence data and the rise in Treasury yields, said Richard Franulovich, chief currency strategist for Westpac Institutional Bank. Higher yields attract capital and that, along with the eventual tapering of the Federal Reserve’s asset purchases, has boiled down to a “dollar-positive backdrop,” he said. The Fed’s monthly purchases of $85 billion in Treasury and mortgage debt are seen as negative for the U.S. dollar.

In addition to rising Treasury yields, U.S. stocks ended higher on Tuesday, as economic data propelled the Dow Jones Industrial Average DJIA, -0.46% to another record close.

“Between those two movements, that’s making the U.S. dollar one of the most coveted currencies,” said Kathy Lien, managing director of FX Strategy at BK Asset Management, of the rise in stocks and Treasury yields.

“As long as U.S. [10-year] yields remain above 2%, I think you’re going to start to see investors start to pile into dollars more and more,” she said.

The consumer-confidence index rose to a five-year high — a reading of 76.2 — in May, the Conference Board said Tuesday. Consumers were especially optimistic about the next six months in terms of the U.S. economy, which is significant as the Federal Reserve could begin to taper its monthly asset purchases within that period.

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Separately, U.S. home prices rose1.4% in March and 10.9% from the year-ago period, the biggest annual growth rate since April 2006. The seasonally adjusted rise in home prices was 1.1%, according to S&P/Case-Shiller data on Tuesday.

Yields on the benchmark 10-year U.S. Treasury note rose about 16 basis points to 2.17% in recent trade, the highest yields in 13 months. One basis point is one one-hundredth of a percentage point.

“The dollar is having a rip-roaring run,” said Westpac’s Franulovich.

The euro EURJPY, +0.10% also moved higher against the Japanese currency, buying ¥131.49 compared with ¥130.58.

The dollar could rise to test ¥104 or ¥105, since U.S. stock-market performance has remained “steady” as Treasury yields have risen in the wake of remarks by Federal Reserve Chairman Ben Bernanke, according to a note from Citi by Osamu Takashima.

The yen had logged wins against the greenback over the past three sessions, as yields on Japanese government bonds scaled higher, although the Bank of Japan has been buying bonds in an effort to push yields lower. Lower yields are part of the Japanese government’s plan to spur economic growth by cooling borrowing costs for consumers and businesses.

Last week, a rise in the 10-year JGB yield to 1% for the first time in about a year, along with weaker-than-expected Chinese manufacturing data, sparked a rally in the yen. Japanese stocks, meanwhile, have struggled lately because of yen strengthening.

The yen got a further boost on Sunday after Bank of Japan Gov. Haruhiko Kuroda said the nation can handle climbing interest rates.

The dollar last week fell about 1.7% against the yen, according to FactSet, the sharpest weekly loss since early June 2012.

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The euro EURUSD, +0.02% traded at $1.2852, down from $1.2931 on Monday, and the British pound GBPUSD, -0.13% fetched $1.5034, trading below Monday’s level around $1.5135.

The Australian dollar AUDUSD, +0.15% bought 96.19 U.S. cents in recent trade, below Monday’s level.

The Aussie has been below parity with the U.S. unit for two weeks, hurt in part by worries about weaker demand for natural resources from China. The Aussie’s move lower also follows a quarter-point interest-rate cut by Australia’s central bank earlier this month.

The dollar fetched 1.0405 Canadian dollars USDCAD, -0.03% in recent trade, compared with 1.0337 on Monday. The Bank of Canada is scheduled to announce an interest-rate decision on Wednesday. “The key statement won’t be changed, but the overall narrative will be more optimistic,” said Franulovich of Westpac.

He added that data since the last meeting have been generally better than expected. Wednesday’s meeting marks the last under Governor Mark Carney before he departs for the top post at the Bank of England.