The dollar held close its strongest level in more than two months on the view that the Federal Reserve is unlikely to cut interest rates before May. The Swiss franc fell to its weakest against the greenback in nearly two months, pressured by its low yield. Investors await speeches by Federal Reserve policymakers later in the day for clearer signs on when the central bank could start its easing campaign.

The Bloomberg Dollar Spot Index was little changed, hovering near its highest since Nov 17 touched on Monday, when it rallied on strong ISM services data and comments from Fed officials that the central bank may wait until May to start cutting rates.

The low-yielding Swiss franc fell 0.2% to 0.8729, a level last seen on Dec 14.

The euro held close to a near two-month low of 1.0723 hit on Monday on the view that the European Central Bank may cut rates more aggressively than the Fed; traders are pricing 125bps of ECB rate cuts this year, compared with 116bps from the Fed.

Cleveland Fed President Loretta Mester, Minneapolis Fed President Neel Kashkari and Boston Fed President Susan Collins deliver speeches later in the day.

EUR/USD slipped as much as 0.2% to 1.0724, reversing gains made in Asia.

GBP/USD was little changed at 1.2539, hanging near 1.2519 hit on Monday, its lowest since mid-December.

USD/JPY was flat at 148.72, holding gains after touching 148.89 on Monday, its highest since November.

The yield on 2-year US note fell 2bps to 4.46%; the 10-year yield was little changed at 4.16%.

AUD/USD was up 0.2%; it pared gains made after the Reserve Bank of Australia warned that it could not rule out further rate rises after keep policy unchanged earlier in the day.

Source : Bloomberg