The US dollar rallied against the euro and yen on Tuesday after stronger-than-expected US economic data boosted expectations the Federal Reserve could reduce the pace of its bond purchases in coming months. US consumer confidence strengthened in May to the highest level in more than five years, a private-sector report showed on Tuesday.
It followed data showing single-family home prices rose in March, racking up their best annual gain in nearly seven years. The euro fell 0.5 percent to $1.2869, having hit a session low of $1.2851 after the data, according to Reuters data.
The dollar rose 1.2 percent to 102.18 yen, after hitting a session high of 102.50 yen, rebounding from a two-week low of 100.68 set on Friday. The dollar rose to a 4-1/2-year high of 103.73 yen last Wednesday. The euro rose 0.8 percent to 131.50 yen, pulling away from Thursday's trough of 129.94 yen, according to Reuters data. The safe-haven Swiss franc fell, with the dollar up 1.1 percent at 0.9738 franc and the euro up 0.6 percent at 1.2533 francs. The dollar index, which measures the greenback versus a basket of currencies, rose 0.5 percent to 84.126.
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