Investing.com - The dollar rose from lows against its rivals Tuesday after the plunge in U.S. Treasury yields stalled. Safe-haven buying emerged after President Donald Trump's tweets raised fears that the trade war was not over.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.11% to 96.86, but was above a session low of 96.31.
Trump said in a tweet he was "Tariff Man," reminding investors that he was not afraid to re-escalate trade tensions with China, scaling back optimism from a day earlier, prompting support for Treasuries and helping the greenback move off lows.
Falling Treasuries were blamed for the leg lower in the greenback earlier in the session, as fears of an economic recession grew after short-dated Treasury rates rose above longer-dated rates, referred to as an inversion of the Treasury yield curve, a signal of a potential economic recession.
Yields on two maturities at the front of the Treasury curve rose above longer-dated 5-year notes overnight Tuesday for the first time in more than a decade.
The pound, meanwhile, reversed its gains from earlier after Prime Minister Theresa May's government was found in contempt of parliament for refusing to release its full legal advice on Brexit.
GBP/USD fell 0.02% to $1.2722, from a session high of $1.2839, which had followed hopes that Brexit could be canceled after a top European legal official said that UK should be able to unilaterally cancel its withdrawal from the EU.
EUR/USD fell 0.17% to $1.1338.
USD/CAD rose 0.45% to $1.3256 a day ahead of Bank of Canada's interest rate decision, widely expected to remain unchanged at 1.75%.
Ahead of the rate decision, Goldman Sachs said it continued to recommend investors position for a "tactical bounce in CAD vs USD going into year-end," citing expectations the Bank of Canada will continue to keep a January rate hike on the table.
USD/JPY fell 0.91% to Y112.65 as a sharp selloff on Wall Street fuelled demand for safe-haven yen.
-- Reuters contributed to this report.