LONDON: The dollar held near three-week highs on Tuesday as a drop in market volatility ramped up demand for riskier assets, with higher US bond yields also offering some support.

Ten-year US Treasury yields rose more than 20 basis points over the past four weeks to a one-month high, inreasing demand for US-denominated assets.

Broader market moves were limited as financial markets re-opened after the Easter holiday.

The dollar index against a basket of six other currencies rose to 97.39, edging toward the 2019 high of 97.71 struck in early March.

"We are in a very range-bound market with the broader picture being more positive for the dollar relative to the euro after the weak eurozone PMI manufacturing data last week," said Ulrich Leuchtmann, head of FX strategy at Commerzbank.

Data released overnight showed US existing-home sales fell more than expected in March. Figures for new-home sales will be released later in the day.

Those may provide some pointers to the state of the US economy. A clearer picture should emerge from Friday's gross domestic product report.

Support for the dollar came amid a general drop in market volatility. Expected moves in the euro/dollar exchange rate over a one-month period held near a five-year low of 4.50 vol.

Speculative long positions on the US dollar reached their highest since December 2015 last week, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday.

"That lack of vol is going to keep investors looking for yield and will do nothing to help the euro, or the yen for that matter. Both are helped by valuation, but that leaves them stuck in tight ranges," Societe Generale strategists said.

The dollar's moves against the euro and sterling were small, with the single currency lower at $1.1243 and the pound up at $1.2986.