The dollar traded not far off a 16-month peak against a basket of its major rivals on Tuesday, enjoying save-haven flows boosted by political turmoil in Europe and concerns over a global economic slowdown.
The dollar index stayed at 97.5 .DXY, nearly its 16-month top of 97.69 touched in the previous session.
The greenback inched up 0.1 percent against the Japanese yen at 113.99. The yen scaled a six-week trough of 114.20 on Monday.
While the U.S. Fed is poised to increase rates by 25 basis points at its next policy meeting, the Bank of Japan is seen to retain its ultra-loose monetary policy in the near future. The diverging monetary policies underpin the dollar.
The pound added 0.28 percent to $1.2879. It has dipped versus the dollar in the last three trading sessions and logged its biggest percentage lost against the buck since Sept. 21 on Monday.
The Australian dollar soared 0.6 percent to $0.7214 in midday trading.