Amid a wave of corporate bond issuance, the dollar index climbed alongside U.S. Treasury yields, with investors awaiting more data to help gauge the Federal Reserve's interest rate trajectory.
The Bloomberg Dollar Spot Index rose 0.2%, rebounding after it fell below its 100-day moving average near 1209 on Monday.
The U.S. December Services PMI fell to 52.5, while the Composite PMI dropped to 52.7.
Approximately 22 borrowers are set to enter the investment-grade bond market on Tuesday, following Monday's issuance volume of $37.1 billion; underwriting desks anticipate this week's total issuance to reach around $70 billion.
The yield on the 10-year U.S. Treasury note increased by 1.5 basis points to 4.18%.
"Expectations for Fed rate cuts remain key, so market makers aren't adjusting positions based on client flows or headlines," said Nick Twidale, Chief Market Analyst at AT Global Markets. "They are waiting for key data, like Friday's U.S. jobs report, to confirm a third rate cut, and might only then sell dollars."
EUR/USD fell 0.3% to 1.1687 ahead of Wednesday's eurozone inflation report.
The one-week implied volatility for the euro rose to its highest level since before last month's ECB meeting.
USD/CHF increased 0.5% to 0.7958.
GBP/USD declined 0.4% to 1.3495, reversing after briefly touching its highest level since September.
USD/JPY rose 0.2% to 156.69; USD/CAD gained 0.3% to 1.3806.
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