The U.S. dollar gained against the euro on Tuesday after greater risk appetite hurt demand for the shared currency and new pressure from short sellers likely weighed, while the Russian ruble recovered on higher oil prices.
Investors sought riskier assets, including stocks and emerging market currencies, after a recovery in oil prices boosted sentiment. The greater risk appetite hurt the euro, which traders view as a safer funding currency, given its low yield.
"We've had a turnaround in risk appetite today," said Greg Anderson, global head of FX strategy at BMO Capital Markets in New York. "Euro longs are getting squeezed out of the market."
The euro hit $1.09090, its lowest since Dec. 24. The U.S. dollar index, which measures the greenback against a basket of six major rivals, rose to 98.16 from a nearly two-week low early Tuesday of 97.799.