Dollar near 18-month high as Treasury yields support greenback

The U.S. dollar held near an 18-month high on Tuesday, supported by elevated Treasury yields, while the euro remained under pressure near a 17-month low. Asian currencies were mostly rangebound as investors weighed a softer U.S. services-sector reading, which lowered near-term Fed hike expectations but suggested persistent price pressures.

The dollar index hovered around 102.11, after reaching 102.21 in the previous session. The EUR/USD pair was around 1.123, while the GBP/USD pair rose marginally to 1.3224. The USD/JPY pair was near 157.92, and the AUD/USD pair was at $0.698, with the NZD/USD pair at $0.560.

The euro extended a roughly 1.2% weekly decline amid political uncertainty and fiscal concerns across the eurozone, as well as concerns over higher energy costs. The Indian rupee was expected to open modestly weaker, with the USD/INR pair around 96.58, nearing its record low of 96.96 reached in May.

The Chinese yuan remained steady, with the USD/CNH pair around 6.702 and the USD/CNY pair at 6.705, as China observed a week-long National Day holiday. Regional currencies awaited policy and growth signals, with BofA noting slower growth and higher inflation risks for Indonesia, potential rate hikes in Malaysia, and fiscal pressures in the Philippines.