The Rupee opened strong on Tuesday, underpinned by softer crude prices on progress in U.S.-Iran negotiations, although ?expectations of Federal Reserve rate hikes are likely to temper ?the rise. Bankers said Monday's decline was not driven by any ?specific flow and appeared largely to be against the prevailing trend, ?catching most market participants off guard. Mounting expectations of a Fed hike in September ?are beginning to weigh on Asian currencies, including the rupee, they added. It appears the risk for the rupee is now shifting from oil to the Fed, a currency trader ?at a private sector bank said. The U.S. dollar held firm on Tuesday as traders positioned for a more hawkish Federal Reserve and oil prices ?rebounded following steep losses, while the yen flirted with a four-decade low. U.S. Treasury yields remained elevated after ?a jump on Monday, with those on interest-rate-sensitive 2-year notes hovering near a 16-month high as traders braced for the prospect of rate hikes later this year. Fed funds futures are pricing in 75% odds of a rate hike by September, while BofA Global Research and Deutsche Bank abandoned prior ?forecasts for steady policy and now expect the Fed to raise rates within the year, citing economic resilience. The bank now expects a modestly stronger dollar amid rising risks for ?tighter U.S. monetary policy, revising a previous call for the currency to be rangebound, he added. Additional 2% to 3% upside for the ?dollar index — a gauge of the currency against six peers — is likely if there is a clear break above the high of the past 14 months at 101.97, he added. The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, was ?a shade higher at 101.01, not far from the one-year high of 101.13 hit late last week. The euro last traded at $1.1423 , hovering near a three-month low after European Central Bank President Christine Lagarde played down second-round inflation worries.The British pound traded at $1.3246, largely steadying after Prime Minister Keir Starmer resigned and paved the way for an orderly transfer of power. The risk-sensitive Australian and New Zealand dollars were each down roughly 0.1% to $0.6991 and $0.5704, respectively. The Japanese yen last traded ?at 161.59 after briefly weakening ?to a two-year low of 161.93 late on Monday as the greenback extended broad gains. A break above 161.96 would take the yen to its weakest level since 1986. Oil prices inched down on Tuesday, extending losses from the previous session, as investors looked for clearer signs of ?progress in restoring crude flows through the Strait of Hormuz following U.S.- Iran peace talks. Brent crude ?futures fell 20 cents, or 0.3%, to $77.70 a barrel and U.S. West Texas Intermediate declined to $73.74 a barrel, down 12 cents, or 0.2%, as of 0323 GMT.......