Dollar holds near two-month peak as yields rise, Fed data looms

The dollar reached a near two-month peak on Tuesday, buoyed by volatile oil prices and rising Treasury yields, while traders awaited US data for insights into the Federal Reserve's rate path. The euro weakened slightly to $1.1367, and the British pound steadied near $1.3248. The dollar index, measuring the US currency against a basket of peers, climbed to 101.2, on track for an 1.8 percent gain this month, its best performance since June.

Oil prices rebounded as traders questioned Iran's ceasefire proposal, with Brent crude nearing $106 per barrel. Treasury yields surged to fresh peaks, with the 10-year at its highest since 2007 and the 30-year at its highest since 2004. The two-year yield also reached its highest in over two years, nearing 5 percent. Market sentiment suggests that strong US economic data may prompt further Fed rate hikes, with a more than 70 percent chance of a rate hike by the end of October, according to CME Group's FedWatch tool.