Dollar rally pauses

The dollar hovered just below a four-year peak against a basket of major currencies early in Asia on Tuesday as the euro steadied near a 14-month trough with sellers taking a bit of a breather. The dollar index .DXY last traded at 84.699, having peaked at 84.861 on Monday, a high not seen since July 2010. It has posted 10 straight weeks of gains as markets wagered US rates would rise long before those in Europe or Japan. The dollar's run even prompted New York Federal Reserve bank president William Dudley to caution that the gains could complicate the Fed's job, potentially hurting US economic performance and pushing down inflation. The euro squeezed up to $1.2849 EUR=, having plumbed a fresh 14-month low of $1.2816, prompting some traders to suspect it might correct higher as key support near $1.2800 loomed. But the bigger picture for a stronger greenback should remain intact thanks to the diverging interest rate views between the United States and its major counterparts including Europe and Japan, according to Reuters.