USD declined against its major rivals in the European session on Tuesday, as the U.S.Treasury yields eased. The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, dropped 0.25% to 92.09.

The benchmark 10-year U.S. Treasury bond yields went down by around 6 basis points from Monday's levels to 1.539% ahead of an auction of $120 billion of government debt. According to Bloomberg, the auctions start later this morning with a sale of $58 billion of 3-year notes. 

The U.S. Treasury yields have been growing in recent months as investors price in prospects of higher inflation and an improved outlook for the U.S. economy due to hefty stimulus and vaccine rollouts.

On Monday, however, the U.S. Treasury Secretary Janet Yellen said that President Joe Biden’s $1.9 trillion coronavirus aid package would fuel a “very strong” U.S. economic recovery, adding that “if it turns out to be inflationary, there are tools to deal with that".

It is expected that the U.S. House of Representatives will pass Biden’s stimulus bill today or tomorrow and the president will sign it later this week.