Following Atlanta Fed President Raphael Bostic's hawkish comments that there was no need to decrease interest rates with threats inflation lingers beyond the central bank's 2% target, cryptocurrencies and bullion have been supported and equities dropped.
Those remarks sparked jitters ahead of Fed Chair Jerome Powell's semi-annual congressional testimony later in the week and a flood of price and job data, culminating in Friday's non-farm payrolls report.
"There are signs of slight irrational exuberance and maybe a squeeze of long-suffering shorts in some markets," especially bitcoin and gold, said Capital.com senior markets analyst Kyle Rodda.
"The moves have come despite only a minor shift in rates market pricing." CME Group's FedWatch Tool shows odds of a May Fed rate cut below 22%, down from 26% a day earlier.
The dollar index rose 0.02% to 103.86 against six major peers. On Monday, losses versus the euro and sterling outweighed gains against the yen, lowering it 0.07%. The euro was unchanged at $1.0852 after rising 0.14% on Monday. The ECB sets policy on Thursday. The meeting is expected to hold rates constant, but futures suggest cuts will begin in June with an 88% chance.
Sterling was unchanged at $1.2685 after a 0.3% increase earlier in the week ahead of Wednesday's UK budget. Finance Minister Jeremy Hunt has tried to quell pre-election tax cut rumors.
After Monday's 0.27% rise, the dollar held at 150.49 against the yen. The currency pair is susceptible to long-term U.S. bond movements, and 10-year Treasury rates rose from 2-1/2-week lows overnight to 4.21%.
Crude oil fell as demand headwinds offset OPEC+'s widely expected extension of voluntary supply restrictions through the middle of the year. Brent fell 17 cents to $82.63 a barrel, while WTI fell 25 cents to $78.49.
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