• The dollar index against a basket of major currencies stood at 101.230 .DXY, near a three-week high of101.380 scaled overnight as investors reassessed the possibility of the Fed hiking interest three times this year following Yellen's comments.
The greenback was a shade higher at 114.370 yen JPY= after gaining about 0.5 percent the previous day, when it rose to a two-week high of 114.500. The euro was steady at $1.0576 EUR= after slipping to a one-month trough of $1.0561 overnight.
• The Federal Reserve will likely need to raise interest rates at an upcoming meeting, Fed Chair Janet Yellen said on Tuesday, although she flagged considerable uncertainty over economic policy under the Trump administration.
Yellen said delaying rate increases could leave the Fed's policymaking committee behind the curve and eventually lead it to hike rates quickly, which she said could cause a recession.
"Waiting too long to remove accommodation would be unwise," Yellen told the U.S. Senate Banking Committee, citing the central bank's expectations the job market will tighten further and that inflation would rise to 2 percent.
"At our upcoming meetings, the committee will evaluate whether employment and inflation are continuing to evolve in line with these expectations, in which case a further adjustment of the federal funds rate would likely be appropriate."
Yellen did not say if Fed policymakers expected the economy would warrant three interest rate increases this year, as they last signaled in December. Nor did she give indications whether the first rate hike of the year might come at its next meeting in March or at the June meeting, which is when most analysts expect a rate increase.
"I can't tell you which meeting it would be," she said, including specifying "whether it's March or May or June."
• U.S. interest rate futures FFZ7 implied traders saw about a 41 percent chance of at least three rate increases in 2017, up from a 33 percent chance on Monday, CME Group's FedWatch program showed.
• Oil pared gains on Tuesday as concerns about rising supply from U.S. shale output overshadowed an OPEC-led effort to cut global output, which has supported oil prices in a higher range. U.S. light crude oil ended Tuesday's session 27 cents higher at $53.20, after earlier rising to $53.72. Brent crude was 36 cents higher at $55.95 a barrel by 2:53 p.m. ET (1953 GMT) off a session peak of $56.46 a barrel.
An early morning rally lost steam as the dollar strengthened after U.S. Federal Reserve Chair Janet Yellen said she expects central bankers to raise interest rates at an upcoming meeting.
Reference: Reuters, CNBC
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