The greenback ended the day slightly higher against majority of its peers on Tuesday (except commodity currencies, which gained on rise in oil prices) due to a rally in U.S. stocks and rising U.S. Treasury yields. (Dow Jones ended the day at 35,719 up by 1.40% or 492 points).  
Versus the Japanese yen, dollar traded with a firm bias in Asia and gained to 113.73 ahead of European open. The pair then retreated in tandem with U.S. yields to 113.47 ahead of New York open before rising higher to a near 1-week high of 113.77 and then traded sideways.  
The single currency traded sideways in Asia before edging up to session highs at 1.1299 at European open. However, the pair then met renewed selling there and tumbled to an intra-day low at 1.1229 in New York morning on cross-selling of euro together with broad-based strength in usd. Later, price pared intra-day losses and staged a short-covering rebound to 1.1273 on broad-based usd's retreat on renewed risk sentiment.  
Reuters reported euro zone inflation could exceed the European Central Bank's forecast in the long term, so there is no reason now to boost a legacy bond purchase programme when an emergency scheme ends next March, ECB policymaker Madis Muller said.  "The Pandemic Emergency Purchase Programme (PEPP) can go to zero in terms of net purchases by March 31," Muller, Estonia's central bank governor, told Reuters in an interview.    "Beyond that, it's not obvious to me that we should - in addition to what we have already communicated in terms of continuing purchases under APP - commit to adding further stimulus on top of what we have already," he said.  
The British pound traded with a firm bias and gained to session highs at 1.3289 in Asia, however, cable then erased its gains and tumbled to an intra-day low at 1.3209 in New York morning on usd's strength before rebounding to 1.3244.  
On the data front, Information from Reuters said German investor sentiment deteriorated in December as a fourth wave of COVID-19 infections and persistent supply bottlenecks in manufacturing clouded the growth outlook for Europe's largest economy, a survey showed on Tuesday.    The ZEW economic research institute said its economic sentiment index fell to 29.9 from 31.7 points in November. And a Reuters poll had forecast a fall to 25.1  
Data to be released on Wednesday :

Japan current account, trade balance, GDP, Eco watchers current, Eco watchers outlook, China exports, imports, trade balance, France non-farm payrolls, Italy Market Holiday, U.S. MBA mortgage application, JOLTS job opening and Canada interest rate decision.

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