Investing.com - The dollar held onto gains against other major currencies on Tuesday, as growing expectations for an upcoming U.S. rate hike continued to support demand for the greenback and investors continued to monitor progress on a U.S. tax bill.
The greenback remained supported after mostly positive U.S. data released late last week added to expectations for a rate hike by the Federal Reserve.
Separately, investors were waiting to see how Republicans would reconcile differences over their proposed tax bill that, if enacted, would be the biggest overhaul of the U.S. tax system since the 1980s.
It would also be the first major legislative achievement since Republicans took control of the White House and Congress in January, but doubts remain over the scale of borrowing needed to finance the bill and the timetable for its passage this month.
Market participants were also monitoring U.S. President Donald Trump's Asian tour. Trump arrived in South Korea on Tuesday amid concerns Washington may resort to military action against its Northern neighbour.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up -% at 94.55 by 05:15 a.m. ET (09:15 GMT).
USD/JPY climbed 0.53% to 114.30, just off the previous session's eight-month high of 114.73, after Bank of Japan Governor Haruhiko Kuroda said on Monday that the central bank will continue with its monetary easing policy, but added that the bank was closely watching the economic effects of prolonged stimulus.
The euro was lower, with EUR/USD down 0.46% at 1.1557, the lowest level since mid-July, still weighed by the European Central Bank decision late last month to extend its bond purchases until September 2018.
Elsewhere, GBP/USD slipped 0.22% to 1.3142, while USD/CHF gained 0.42% to trade at 1.0016.
The Australian and New Zealand dollars were weaker, with AUD/USD down 0.51% at 0.7653 and with NZD/USD sliding 0.45% to 0.6915.
Earlier Tuesday, the Reserve Bank of Australia left interest rates unchanged at 1.50%, in a widely expected move.
Meanwhile, USD/CAD advanced 0.45% to 1.2760.