Dollar fragile as investors weigh Iran sanctions, Treasury buybacks

The euro EUR= was a touch softer at $1.1663, on track for a second day of decline but after hitting a three-month peak last week. Sterling was a touch stronger at $1.3635.

Investors also avoided large bets as the expansion of sanctions against Iran unveiled on Monday did not have any mention of major trade partners such as China, although Bessent warned countries to cut business ties with Tehran or risk being forced out of the dollar-based financial system.

Currency traders also processed the implications of the trade dispute between the U.S. and Canada. The Canadian dollar weakened for a second day against its U.S. counterpart, with the U.S. dollar up 0.1% at C$1.3860 CAD=D3, having gained 0.6% on Monday to mark biggest daily gain in two months.

Elsewhere, the dollar climbed 0.1% on the Japanese yen to 159.215. JPY=EBS The yen has been in something of a holding pattern in recent weeks, having given back some of its intervention gains, but is still well off a multi-decade low of about 164 it hit before Japanese authorities stepped into markets.