The U.S. dollar held firm against major peers on Tuesday, following its biggest rally in two weeks after strong services data in the United States fuelled bets the Federal Reserve may lift interest rates more than recently projected.

Japanese household spending rose for a fifth straight month in October from a year earlier, data showed on Tuesday, as easing coronavirus cases prompted more people to shop and eat at restaurants.

Asian stocks retreated from three-month highs and the dollar held on to gains following strong U.S. data that again suggested the Federal Reserve might stick longer with aggressive interest rate increases.

Oil prices rose on Tuesday as sharp losses in the prior session invited some bargain buying and as markets bet on a recovery in Chinese demand, although concerns over rising U.S. interest rates kept investors on edge. 

Asian shares extended their rally on Monday as investors hoped steps to unwind pandemic restrictions in China would eventually brighten the outlook for global growth and commodity demand, nudging the dollar down against the yuan.

Oil prices rose sharply on Monday as more Chinese cities began relaxing strict anti-COVID measures, ramping up hopes for a full reopening, while the OPEC kept production steady at its latest meeting,