The euro remains under pressure as geopolitical risks and higher oil prices support demand for the US currency.
EUR/USD traded near 1.1394 on Tuesday.
On the daily chart, the pair could retest the 1.1380 support level.
The US Dollar Index held near 101.2 after a sharp advance in the previous session. The greenback was supported by safe-haven demand after US President Donald Trump reinstated a blockade on Iranian vessels passing through the Strait of Hormuz and demanded compensation from countries benefiting from US efforts to secure the key shipping route.
The decision sent oil prices sharply higher and renewed concerns that central banks may need to keep monetary policy restrictive for longer or raise interest rates again to contain inflation.
Investors are now focused on US inflation data and Federal Reserve Chair Kevin Warsh’s testimony before Congress. His comments could provide fresh guidance on the central bank’s next policy steps.
Markets currently assign roughly a 51% probability to a Fed rate hike in September, compared with a 23% chance that rates will remain unchanged.