The U.S. dollar index fell on Tuesday and the euro rose against the dollar for the first time in three sessions, as Russia signaled that some troops were starting to return to permanent bases after ending exercises. The yen and Swiss franc fell as safe-haven demand faded, while the Norwegian crown fell along with crude oil prices. The U.S. dollar index was last down 0.31 percent at 95.98, while the U.S. 10-year Treasury yield rose about 6 basis points to 2.043 percent. Russian President Vladimir Putin said he wanted a diplomatic solution to tensions with the U.S. and its allies, and announced the withdrawal of some of the soldiers who had assembled near the Ukrainian border.

EUR/USD was up 0.46% at $1.1359, buoyed by call option interest; risk reversals across most maturities showed less bearish sentiment towards the euro. Marc Chandler of Bannockburn Global wrote that today's stronger tone was also a response to a geopolitical development in which some Russian troops are returning to their bases.

USD/JPY edged up 0.06% to 115.61, with 1-week volatility lower against the yen as concerns over geopolitical tensions receded. Speculation and options-related trade slowed the dollar's gains against the yen, even as U.S. Treasury yields climbed. The Swiss franc was also down, with USD/CHF up 0.1% to 0.9253.

GBP/USD pared gains, up 0.07% to 1.3538, after rising as much as 0.3% earlier; EUR/GBP rose 0.39% to 0.8390

The Australian dollar was up 0.35% at 0.7152; the dollar was down 0.09% at 1.2718 against the Canadian dollar.

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