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

The dollar reached near a two-month high on Tuesday, buoyed by volatile oil prices and rising Treasury yields. However, gains were limited as market participants awaited US data for insights into the Federal Reserve's monetary policy stance. The euro weakened to its weakest level in three months at $1.1367, while the British pound remained steady near a three-month low.

The dollar index, which gauges the US currency against a basket of peers, climbed to 101.2 and is poised for an 1.8% monthly gain, its best since June. Oil prices rebounded, with Brent crude futures nearing $106 a barrel, as speculation grew over a potential resolution to the Iran conflict. Meanwhile, US Treasury yields surged to fresh highs, with the 10-year benchmark topping out at its highest since 2007 and the 30-year at its peak since 2004.

The closely watched two-year yield also surged to its highest in over two years, nearing 5%. Market sentiment suggests that investors are cautiously optimistic, awaiting forthcoming US economic data, which could potentially prompt further rate hikes by the Federal Reserve later in the week.