The dollar rose on Tuesday, led by gains against the yen and Swiss franc, as risk appetite improved and Wall Street's main indexes advanced, helping the currency stabilize after sharp declines the previous day.
The outlook for the dollar, however, remains murky due to global trade tensions. The greenback has lost 2 percent in the year so far.
"At the moment, support from high expectations for further monetary policy tightening from the Federal Reserve has been offset by ongoing political pressures and global trade uncertainties," Fawad Razaqzada, market analyst at Forex.com in London, said.
China on Sunday announced tariffs on $3 billion in imports of U.S. food and other goods in response to U.S. tariffs on imports of aluminum and steel, a skirmish that investors fear is a prelude to a broader trade war.
The Trump administration is expected to announce this week U.S. tariffs on $50 billion to $60 billion in Chinese imports. On Tuesday China's ambassador to the United States said Beijing will take counter-measures of the "same proportion" and scale if Washington imposes further tariffs.