Washington and Beijing on Monday announced an agreement to slash the massive tariffs they had imposed on each other for 90 days, sparking a relief rally across markets that swept up global stocks and sent the dollar surging.

"It's way better than the market was expecting," said Rodrigo Catril, senior FX strategist at National Australia Bank.

"It's just an indication of, for one, the US administration is quite sensitive to the impact [tariffs are] having on the economy, and some would say there's been a serious walk back in terms of what they've done."

China's yuan scaled a six-month high, peaking at 7.1855 per dollar, which in turn lifted the Australian and New Zealand dollars.

The Aussie was up 0.64 percent to $0.6412, while the kiwi gained 0.55 percent to $0.5889. The two Antipodean currencies are often used as liquid proxies for the yuan.

Elsewhere, the yen and the euro were recovering from their steep falls against a resurgent dollar in the previous session.

The yen was up 0.48 percent at 147.76 per dollar, having tumbled more than 2 percent on Monday. Similarly, the euro rose 0.25 percent to $1.1114, after sliding 1.4 percent overnight.

"In terms of magnitude, I think it's fair to say that the big moves have been seen. But for scope for an extension of the moves, I think particularly the euro and the yen will have a bias for those moves to extend a little bit further over the coming weeks," Catril said.

The dollar fell 0.25 percent against the Swiss franc to 0.8429, reversing some of Monday's 1.6 percent jump. Sterling ticked up 0.16 percent to $1.3199.

Against a basket of currencies, the dollar hovered near a one-month high and was last at 101.54.

The de-escalation of US-China trade tensions has in turn led traders to pare back bets of Federal Reserve rate cuts, on the view that policymakers would be under less pressure to ease monetary policy to support growth.

US Treasury yields rose in tandem, with the two-year yield steadying near a one-month high at 4.009 percent, while the benchmark 10-year yield was last at 4.4650 percent.

Futures show markets are now pricing in just about 56 basis points of Fed cuts by December.

"The Fed has been focused on the increase in uncertainty. This will remain the case, although the announcement may remove some of the downside risk that had been prevalent had the higher tariff rates remained in effect," said David Doyle, head of economics at Macquarie.

Data on US inflation is due later on Tuesday, where expectations are for the core and headline number to have picked up on a monthly basis in April.

In cryptocurrencies, bitcoin last traded at $102,600, after surging to its highest since January 31 in the previous session.

Ether eased 1.1 percent to $2,458.36, but strayed not too far from a more than two-month high hit on Monday.