The euro firmed against most of its peers on Tuesday as short positions were trimmed ahead of Thursday's expected rate hike by the European Central Bank and U.S inflation data later this week.

In geopolitics, oil rose amid concerns about explosions near Iran facilities, while worries over Houthi attacks on Saudi cities subsided. Separately, the Trump administration announced additional Iran-related sanctions.

Bank of England Governor Andrew Bailey pushed back on expectations of inevitable rate hikes, while BOE Deputy Governor Dave Ramsden said inflation pressures appear relatively benign.

NY Fed survey showed U.S. inflation expectations were little changed in August, despite rising concerns over jobs and household finances.

DXY remained capped below its 200-day moving average at 99.14, with quarterly-roll activity boosting futures volumes.

The Canadian dollar outperformed its G10 peers, supported by fresh multi-decade highs in commodity indices despite Canada's retaliatory tariffs on U.S. goods taking effect.

EUR/USD edged up amid weakness in U.S. equites and a firmer CNH, but a doji below a nearby 200-DMA at 1.1634 keeps the near-term outlook slightly bearish, unless a rising 21-DMA at 1.1612 supports.

GBP/USD was steady within a 1.3523-1.3562 range, with a neutral near-term outlook below its 21-DMA of 1.3555 ahead of next week's Bank of England meeting.

AUD/USD climbed amid stronger metals and a stronger CNH, but a daily doji signals near-term indecision, with support at 0.7205-0.7220 and broader outlook remaining constructive.

USD/JPY rebounded to 154.43 on short-covering and stronger commodities, with scope to test 154.97 and 155.00 ahead of U.S. CPI, while support lies 153.31 100-WMA ahead of 152.10.

Treasury yields were up about 2 basis points, leaving the 2s-10s curve steady at +40.6bp.

The S&P 500 slipped 0.43%.

WTI oil rose 2.3% to a three-month high.

Gold fell 0.81% and copper gained 1.8%

Heading toward the close: EUR/USD +0.03%, USD/JPY -0.28%, GBP/USD +0.05%, AUD/USD +0.03%, DXY -0.35%, EUR/JPY -0.28%, GBP/JPY -0.29%, AUD/JPY -0.25%.(Editing by Burton Frierson Robert Fullem is a Reuters market analyst. The views expressed are his own)