USD strengthened against other major currencies in the European session on Tuesday, as the U.S. Treasury yields continued to grow, making the U.S. currency more attractive to investors.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, increased 0.21% to 93.58.

The 10-year Treasury yields are trading at 1.528%, compared with 1.485% at yesterday’s close. This is the highest rate since June. 

U.S. Treasury yields have surged since the end of last week after the Federal Reserve signaled the end of the period of the super-cheap money. The latest policy update from the U.S. central bank indicated that the Fed could begin scaling back its bond purchases in November and end the process by mid-2022. In addition, the Fed officials’ projections of interest rates, known as the dot plot, pointed to a sooner-than-expected rate hike for 2022.

Market participants also assessed Fed Chairman Jerome Powell’s prepared remarks, which were released ahead of his Senate testimony, set to begin today at 14:00 GMT. The Fed’s chair noted that inflation pressures and hiring difficulties in the world's biggest economy may be "greater and more enduring than anticipated", but added that they would abate. He also noted that “if sustained higher inflation were to become a serious concern” the Fed would certainly respond and use its tools to ensure that inflation runs at levels that are consistent with its goal. These comments heightened inflation concerns.