The ongoing standoff between the United States and Iran over control of the Strait of Hormuz keeps oil prices near two-week highs, providing a lift to the Bloomberg Dollar Spot Index. The Japanese yen is edging closer to the closely watched 160 level against the U.S. dollar.

The Bloomberg Dollar Spot Index rose 0.1%, snapping a three-day losing streak.

"The dollar's gains today are primarily driven by higher oil prices and risk appetite," said Andrew Hazlett, a foreign exchange trader at Monex Inc.

"Ahead of next week's Jackson Hole symposium, the dollar may hold steady, but dollar bulls need greater clarity on how the Fed will respond under a potential Warsh chairmanship, as well as stronger assurances that the central bank will adhere to its 2% inflation target," wrote Shaun Osborne and Eric Theoret of Bank of Nova Scotia. "Otherwise, further increases in U.S. Treasury yields could increasingly reflect concerns about fiscal and inflation risks, rather than monetary policy support, leaving the dollar vulnerable even if interest rates rise."

The yield on the 30-year U.S. Treasury has climbed nearly 40 basis points since late June, touching 5.33% on Tuesday—its highest level since mid-2007—before paring some of those gains. Global government borrowing costs are surging.

Preliminary data from ADP Research and the Stanford Digital Economy Lab show that U.S. private-sector employment averaged weekly gains of 9,500 jobs over the four weeks ending August 1.

USD/JPY rose 0.1% to 159.58.

"The U.S. government's explicit encouragement for Japanese authorities to use the Federal Reserve's Foreign and International Monetary Authorities (FIMA) repo facility signals that Washington does not want to see Japan directly sell U.S. Treasuries," said George Saravelos, global head of FX research at Deutsche Bank. "It is unrealistic to expect Japan to borrow dollars at a punitive FIMA rate to fund intervention, so the bar for further currency market intervention has been raised."

"U.S. intervention in the currency market is not only ineffective but also counterproductive," he added.

USD/CAD rose 0.3% to 1.3910.

According to sources familiar with the matter, the Trump administration is downplaying the possibility of a last-minute deal with Canada. If no agreement is reached, a new round of tariffs would take effect on Wednesday.

GBP/USD fell 0.1% to 1.3536, as data showed British employers cut more jobs in July and job vacancies dropped to a five-year low.

EUR/USD slipped to 1.1577. One-month options indicate market sentiment toward the euro has turned bullish for the first time since early March.

German investor confidence rose more than expected.

NZD/USD fell 0.5% to 0.5873.