The dollar edged higher, ending a two-day losing streak, as the outlook for Middle East conflict negotiations remained uncertain. Most G10 currencies declined during the session, with the British pound being the sole gainer.
The Bloomberg Dollar Spot Index rose more than 0.2%, following a 0.3% drop over the previous two trading days.
U.S. President Donald Trump stated that Israel and Hezbollah have agreed to halt mutual attacks in Lebanon, and that U.S. negotiations with Iran are continuing "rapidly."
Earlier, Iran's semi-official Tasnim news agency reported that Iran would stop exchanging information with the United States in protest of Israel's escalating actions in Lebanon.
"The FX market appears fatigued by the Gulf situation," said Chris Turner, head of FX strategy at ING Bank, in a report. "The U.S. macro story may be regaining momentum and could provide broader support for the dollar."
Boosted by new orders and output growth, U.S. manufacturing activity expanded in May at its fastest pace in four years.
Brent crude oil surged over 6% at one point, rebounding from a six-week low, before giving back about half of those gains.
The yield on the 10-year U.S. Treasury note rose 4 basis points to 4.47%, following a 23-basis-point decline over the previous seven sessions.
The pound/dollar pair rose for a third consecutive day, inching higher to 1.3462.
The dollar/yen pair gained 0.2% to 159.65; it had reached an intraday high of 159.76 on Monday, its highest level since April 30.
Despite Japan's record-breaking currency market interventions, the yen underperformed most G10 currencies in May.
The euro/dollar pair fell 0.2% to 1.1633.
The New Zealand dollar/U.S. dollar pair dropped 0.9% to 0.5938, leading losses among G10 currencies, after the kiwi outperformed last week and throughout May.
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