Investing.com - The dollar trimmed gains against its rivals Tuesday, pressured by a sharp rally in sterling on renewed hopes for a breakthrough in Brexit talks.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.02% to 95.43.
A surge in sterling put the dollar on the back foot as traders cheered a report suggesting the UK and EU made progress in Brexit talks just weeks before the crucial EU Summit at the of October.
The UK and EU reportedly were close to reaching an agreement on divorce terms as soon as Monday, though some differences on the Ireland border remained an issue, Dow Jones Newswire reported, citing diplomats. The EU and U.K. reportedly are aiming to agree on an outline of a future trade relationship by November.
GBP/USD rose 0.3% to $1.3129 after trading as low as $1.3033 intraday.
The rosier backdrop for Brexit talks "will be enough to keep the pound bid for now," said Neil Jones, head of FX hedge fund sales at Mizuho.
EUR/USD fell 0.12% to $1.1478 as lingering concerns over the budget issue between Italy and the European Commission kept the single currency on the back foot.
USD/CAD fell 0.05% to C$1.2958 as rising oil prices supported the oil-price-sensitive loonie.
USD/JPY fell 0.12% to Y113.08 as US-Japan bond yield differentials narrowed, supporting the yen, after the 10-year US Treasury yield retreated intraday from a fresh seven-year high above 3.25%.