The dollar found support at the start of Asian trading on Tuesday after U.S. President Donald Trump said he had paused a planned attack against Iran to allow negotiations.
Bond markets stabilised after a two-day selloff. The U.S. dollar index held steady at 99.026, attracting bids after easing fears of an escalation pushed the gauge 0.3% lower on Monday.
"Sentiment stabilised after reports that Trump called off a planned strike on Iran," Westpac analysts noted.
The yield on the U.S. 10-year Treasury bond fell 3 basis points to 4.591%. Brent crude futures slumped 2.4% to $109.43 per barrel.
The dollar had gained strength during the past week as a safe haven from Middle East war escalation and global bond selloff.
Fed funds futures now imply a 36.2% probability of a 25-basis-point rate hike at the December meeting, compared to 0.5% a month ago.
Against the yen, the dollar was flat at 158.895. Japan's economy grew an annualized 2.1% in Q1, beating forecasts.
Finance Minister Katayama said Japan stands ready to act against excessive FX volatility. Tokyo may have spent nearly 10 trillion yen since April 30 on intervention.
The euro was flat at $1.1650, the pound at $1.3427. The Aussie and kiwi were slightly lower.
Bitcoin edged up 0.2% to $77,005.69, ether rose 0.8% to $2,131.91.
