The U.S. dollar held near a two-month high on Tuesday, firming against most major peers as Middle East uncertainty curbed risk appetite and traders ramped up bets on a Federal Reserve rate hike later this year, Reuters reported.
Iran and Israel halted attacks on each other on Monday after an appeal from U.S. President Donald Trump, but tensions ran high as Tehran threatened to resume strikes if Israel continued to hit Iran-backed Hezbollah in Lebanon.
U.S. efforts to reach a lasting agreement with the Iranians to end their more than three-month-old war have made little headway, leaving oil prices elevated and underpinning safe-haven demand for the greenback.
The euro stood at $1.1528 and the sterling fetched $1.3335 , both down roughly 0.05% so far in Asia after hitting their two-month lows in the previous session.
The risk-sensitive Australian dollar was down 0.1% at $0.7039, and the New Zealand dollar traded at $0.5804.
The Japanese yen weakened to as much as 160.295, continuing to hover around the 160 level widely seen as a line in the sand for potential official intervention.
The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, was little changed at 100.03, near the two-month high of 100.21 it struck on Monday.
"When you think about this idea of a peace deal or some sort of truce... what have we achieved in the past couple of weeks? Not a great deal," NAB's senior FX strategist Rodrigo Catril said in a podcast.
"We've seen the dollar being stronger because of this uncertainty, but also because of strong data in the U.S."
The offshore yuan was flat at 6.7857 per dollar, ahead of trade data due later in the day that is expected to show China's export growth strengthened in May.
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