During U.S. afternoon trade, the dollar was hovering close an almost two-year high against the euro, with EUR/USD falling 0.47% striking 1.2483.
Sentiment on the euro remained weak amid concerns over the situation in Spain, where rising bond yields, the growing costs of bank rescues and a recession hit economy fuelled fears that Madrid will be forced to seek an international bailout.
Earlier Tuesday, Spain's Treasury auctioned EUR8.5 billion of six-month bonds at an average yield of 2.10%, a six-month high, up from 1.77% at a similar auction last month.
The yield on Spanish 10-year bonds rose to 6.48% following the auction, hovering just below the 2012 high of 6.50% hit Monday after the government announced that it was to recapitalize one of the country's largest commercial lenders.
The greenback traded higher against the pound, with GBP/USD giving back 0.34% to hit 1.5628.
Elsewhere, the greenback traded lower against the yen but higher against the Swiss franc, with USD/JPY giving back 0.02% to hit 79.45 and USD/CHF surging 0.44% to hit 0.9626.
Elsewhere, the greenback was marginally higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD gaining 0.23% to hit 1.0261, AUD/USD falling 0.42% to hit 0.9812 and NZD/USD giving back 0.24% to hit 0.7601.
The commodity linked dollars found support after Chinese media reports fuelled speculation that Beijing may soon launch an economic stimulus program, to counter signs of a slowdown in growth in the world's second largest economy.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, gained 0.34%, to trade at 82.62.
The greenback was little changed after data showed that the S&P/Case-Shiller U.S. home price index fell at an annualized rate of 2.6% in March, declining for the 21st consecutive month.
A separate report by the Conference Board showed that U.S. consumer confidence declined unexpectedly in May.