The U.S. dollar dropped against its major counterparts in the European session on Tuesday, amid lower treasury yields and on a rise in European shares on bargain hunting.

The yield on 10-year U.S. treasuries fell to 3.837 percent. Yields move inversely to prices.

Boston Fed President Susan Collins said on Monday that inflation could be peaking and the economic downturn is expected to be modest.

Atlanta Fed President Raphael Bostic said that more tightening is required to get inflation under control.

The U.S. economic data due later in the day include durable goods orders, new home sales and consumer confidence index.

The greenback dropped to 144.06 against the yen and 0.9859 against the franc, after rising to 144.75 and 0.9943, respectively in early deals. The currency is likely to find support around 129.00 against the yen and 0.96 against the franc.

The greenback edged down to 0.9671 against the euro and 1.0837 against the pound, reversing from its early highs of 0.9584 and 1.0647, respectively. If the currency drops further, 1.12 and 1.23 are seen as its next support levels against the euro and the pound, respectively.

The greenback weakened to 0.5722 against the kiwi, 0.6513 against the aussie and 1.3640 against the loonie, down from its early highs of 0.5631, 0.6446 and 1.3742, respectively. The next likely support for the greenback is seen around 0.62 against the kiwi, 0.69 against the aussie and 1.29 against the loonie.

Looking ahead, U.S. consumer confidence index for September and new home sales and durable goods orders for August and FHFA's house price index and S&P/Case-Shiller home price index for July are due out in the New York session.

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