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The U.S. dollar held close to a 10-week peak versus a basket of major peers, and near its highest since November against the yen, as Treasury yields rose made fresh post-financial crisis highs on Tuesday amid speculation U.S. rates will be stay high for longer.

China's central bank bolstered the yuan by setting a much stronger-than-anticipated daily mid-point, and the currency was steady in early trade having come under mounting pressure in recent weeks due to investors' impatience over Beijing's slow policy response to a slowing economy slows and ailing property sector.

The U.S. dollar index - which measures the currency against six developed-market counterparts, including the yen and euro - slipped 0.1 to 103.24, but remained not far from Friday's high of 103.68, a level not seen since June 12.

"Surging long-term U.S. yields and the underwhelming response by China's policymakers to ongoing stresses in China's property and financial markets continue to provide bullish impulse to" the U.S. dollar, Richard Franulovich, a currency strategist at Westpac, wrote in a note.

Looking ahead to Fed chairman Jerome Powell's highly anticipated speech on Friday at the U.S. central bank's annual symposium in Jackson Hole, Wyoming, Franulovich said, "If Chair Powell keeps the door ajar to (rate) hikes ... a new front for US$ upside can form," with the dollar index potentially breaking above 104.

Money markets currently lay a bit less than 50/50 odds for another 25 basis point Fed hike by November, before the central bank shifts to rate cuts next year.

Against Japan's currency, the dollar edged 0.1% lower to 146.125 yen, after earlier rising to 146.425, bringing it close to Thursday's peak of 146.565, which was the highest since Nov. 10.

The dollar-yen pair tends to be extremely sensitive to changes in long-term U.S. Treasury yields, and the benchmark 10-year yield reached the highest since November 2007 at 4.366% on Tuesday.

The euro added 0.1% to $1.09055.

Meanwhile, China's central bank set the yuan mid-point at 7.1992 per dollar on Tuesday, 1105 pips firmer than Reuters' estimate, attempting to keep a floor under the currently following its slide to a 9 1/2-month low of 7.349 in offshore trading last week.

Tuesday's fixing follows shallower and narrower interest rate cuts than markets had expected a day earlier, as Beijing stimulus measures continue to underwhelm despite increasing problems in the property sector and the economy as a whole.

The offshore yuan was little changed at 7.2872, after firming about 0.1% after the fixing.

The Australian dollar, which often trades as a proxy to China, was also little changed at $0.6413 after initially strengthening slightly following the fixing.

The Aussie has grinded higher in recent sessions after dropping to a 9 1/2-month low of $0.6365 on Thursday.

"It will likely take a big Chinese stimulus package focused on commodity?intensive infrastructure spending to turn around the downtrend in AUD/USD," Kristina Clifton, senior currency strategist at Commonwealth Bank of Australia, wrote in a note, adding there is a "growing risk" or a dip below $0.60 this year.