The dollar edged up against most major peers on Tuesday as traders, seeing no immediate breakthroughs on the U.S. debt-ceiling talks, look to new inflation data for a clearer picture of the economic outlook and the Federal Reserve's likely rate-hiking path.

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The dollar index, which measures the currency against six rivals, pared gains that took it to a nearly one-week high earlier in the session, and was last seen at 101.63 or up 0.2% in afternoon trading.

"I believe we're going to see maybe a little bit of grandstanding (on the debt ceiling), just making sure that each side is pandering a bit to their base," said John Doyle, vice president of trading and dealing at Monex USA. "So I don't think that we're going to have a breakthrough today. And that might be why the dollar is a bit stronger."

"Overall, longer-term, we do see a deal getting done," he said. "We've kind of seen this movie before. But we shouldn't downplay the threat that the wheels might come off. The threat is always there. Once you play with fire enough, eventually you could get burned. So while we don't think that that's the most likely scenario, we can't completely dismiss it."

The release of closely watched U.S. inflation data on Wednesday is likely to set the tone for markets, after stronger-than-expected jobs data last week.

Any Federal Reserve policy tweaks will have to be weighed against a backdrop of recent turmoil in the U.S. banking sector and a political impasse in Washington over lifting the country's debt ceiling and avoiding a default, analysts said.

The Fed's quarterly survey of bank loan officers released on Monday showed that credit conditions for U.S. businesses and households continued to tighten at the start of the year, most likely due to interest rate hikes.

The survey was among the first measures of sentiment in the banking sector since the recent run of bank failures, sparked by Silicon Valley Bank's collapse in March.

The euro fell 0.39% to $1.0962.

Sterling remained flat at $1.2620, ahead of Thursday's central bank policy meeting.

"It's widely expected that we're going to get that quarter-basis-point hike, and then we'll see where they go from there," Doyle said.