The U.S. dollar appreciated against its major rivals during the European session on Tuesday amid rising treasury yields, as investors bet on the possibility of the Fed reducing the size of its asset purchase program soon and start raising interest rate next year.

Market participants expect the Fed to make an announcement on tapering in November following hawkish comments from the central bank's officials.

Inflation in the U.S. is elevated and could persist in the coming months before dropping back towards the Fed's long-run 2 percent goal, Chairman Jerome Powell said in prepared remarks before the Senate Banking Committe.

Powell will appear along with Treasury Secretary Janet Yellen at an oversight hearing on the government's massive support programs passed to deal with the COVID pandemic.

Fed Governor Lael Brainard said that the labor market would meet her criteria for tapering immediately, whereas New York Fed President John Williams indicated that slowing down the bond buying program may be required soon.

U.S. treasury yields rose, with the benchmark 10-year yield touching 1.52 percent.

The greenback climbed to a 5-day high of 1.3620 versus the pound and near a 6-week high of 1.1672 against the euro, off its prior lows of 1.3717 and 1.1703, respectively. The greenback is seen finding resistance around 1.35 versus the pound and 1.15 against the euro.

The greenback rebounded from its previous lows of 0.9249 against the franc and 110.94 against the yen and appreciated to an 8-day high of 0.9295 and near a 3-month high of 111.42, respectively. The greenback may possibly challenge resistance around 0.94 against the franc and 113.5 against the yen.

The greenback was up at near a 5-week high of 0.6958 against the kiwi and a 4-day high of 0.7242 against the aussie, rising from an early low of 0.7027 and a 4-day low of 0.7311, respectively. The next possible resistance for the greenback is seen around 0.68 against the kiwi and 0.70 against the aussie.

The greenback reached as high as 1.2657 against the loonie, after falling to nearly a 3-week low of 1.2594 in Asian trading. On the upside, 1.29 is possibly seen as its next resistance level.

Looking ahead, European Central Bank President Christine Lagarde is due to deliver opening remarks at the 2021 ECB Forum on Central Banking, via satellite at 8 am ET.

U.S. wholesale inventories and advance goods trade balance for August and FHFA's house price index and S&P/Case-Shiller home price index for July, as well as consumer confidence index for September will be published in the New York session.

Federal Reserve Bank of Chicago President Charles Evans is set to deliver opening remarks at the payment systems at a virtual symposium hosted by the Federal Reserve Bank of Chicago at 9 am ET.

Federal Reserve Chair Jerome Powell is scheduled to testify about the Coronavirus and CARES Act before the US Senate Committee on Banking, Housing, and Urban Affairs, in Washington DC at 10 am ET.

Federal Reserve Governor Michelle Bowman is due to speak at the Community Banking in the 21st Century Research and Policy Conference, via satellite at 1:40 pm ET.

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