Oil prices dived as much as 4 percent after a CNN report raised doubts about whether Trump would impose sanctions as quickly as the market had expected, a decision that would reduce global crude supplies and feed tensions in the Middle East.
"There's a little exhaustion with the long-dollar trade, but I don't think we've reached the end of it yet", said Ilya Gofshteyn, FX and global macro strategist at Standard Chartered Bank in NY.
US crude fell 2.93 percent to $68.66 per barrel and Brent was last at $74.28, down 2.48 percent on the day.
The three-week long rally for the USA currency, in which it has reversed several months of weakness, is dominating currency markets this week and has caused the unwinding of popular trading positions across emerging markets and in the "G10".
The Swiss franc, another traditional safe-haven currency, was steady against the dollar CHF= at 1.0019 franc, and was 0.6 percent stronger at 1.1883 franc EURCHF=.
The U.S. dollar bought 108.98 Japanese yen, lower than 109.08 Japanese yen of the previous session.More news: Couple Marries Days After Bride's Arm Bitten Off in Crocodile Attack
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The euro has lost one percent of its value in May as investors betting on a falling dollar were caught out and rushed to cover their positions, further pushing the greenback higher.
"The dollar is somewhat undervalued relative to the euro and the pound but it is very overvalued relative to the Japan yen".
The index that tracks the dollar against six currencies slipped 0.1 percent to 93.028 after touching a 2018 peak of 93.416 earlier.
Swedish inflation edged down to 1.9 percent on a year-over-year basis last month, just below the Riksbank's 2 percent goal.
On Monday, Italy's two largest parties resisted President Sergio Mattarella's call to rally behind a "neutral government".
The slowdown in euro zone growth is not dramatic and the European Central Bank can still end its bond purchase scheme this year, ECB policymaker Vitas Vasiliauskas told German newspaper Boersen-Zeitung on Tuesday.
The Australian dollar extended its overnight slide to touch an 11-month low of $0.7415.