NEW YORK (Dow Jones)-- The dollar rallied Tuesday against most of its competitors as sinking commodities and U.S. stocks in the red led investors to take some money off the table of riskier assets. The euro failed to sustain earlier gains on the back of strong investor demand for an auction of short-term Greek debt. Lingering concerns over whether Greece will be able to fund its long-term debt, along with other peripheral nations waiting in the wings with their own debt problems, will keep the euro under pressure, analysts said. After euro zone officials over the weekend agreed to a plan to backstop Greek debt, now it appears that perhaps we need something else," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York. "Maybe that won't be the backstop we need." Tuesday around noon, the euro was at $1.3572 from $1.3584 late Monday, according to EBS via CQG. The dollar was at Y93.18 from Y93.26, while the euro was at Y126.47 from Y126.67. The U.K. pound was at $1.5367 from $1.5380. The dollar was at CHF1.0568 from CHF1.0595. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 80.617 from 80.573. A U.S. trade deficit that widened slightly more than expected initially helped the euro tick to an intraday high against the dollar before the common currency gave up its gains to slip against the greenback, as U.S. stocks dipped into negative territory. Slightly worse-than-expected U.S. trade data released Tuesday showed the U.S. deficit in international trade of goods and services rose 7.4% to $39.70 billion in February from a revised $36.95 billion the month before. Despite the overall widening in the trade gap, the U.S. trade deficit with China in February narrowed to its lowest level in nearly a year. The February deficit was higher than the $39 billion shortfall Wall Street expected. Even though the data were slightly worse-than-expected, a generally brightening picture of the U.S. economy--which should be bolstered by key data releases later this week--means the U.S. recovery continues to entrench itself, Woolfolk said. A steady pace of positive U.S. data will eventually lead to further dollar gains, Woolfolk said, as investors increasingly see the Federal Reserve as increasing key interest rates sooner than its peers in the euro zone or Japan. The euro zone's continued struggles over Greece led the common currency overnight to slip from an earlier high as investors pondered whether Greece, which struggles with massive deficits, would be able to finance longer-term debt. "The market's muted reaction to the auction underlines that this was, after all, only a bill auction, and that Greece's largest challenges still lie ahead," Credit Suisse analysts said in a note to clients, referring to the sale of EUR1.56 billion of short-term debt when longer-term debt auctions remain. Despite the demand for Tuesday's sale of short-term Greek debt, "there are nevertheless lingering concerns that the solution for Greece is somehow likely to run into problems at some indefinite point in the future," said Andrew Wilkinson, senior market analyst at Interactive Brokers in Greenwich, Conn. Even if the euro is able to eke out a "short-term bounce...a lot of problems remain," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, N.J. Debt-addled Portugal and Spain wait in the wings, he said, and the underperformance of the euro zone economy make the common currency unattractive to investors, he said. Separately, Chinese President Hu Jintao told U.S. counterpart Barack Obama on Monday that "China would firmly stick to the path of reforming its currency exchange-rate formation mechanism based on its own economic and social development needs...In particular, China won't push forward the reform under external pressure," Xinhua News Agency reported Tuesday. The remarks by Hu, who rarely comments on China's currency policy, are the latest indication Beijing is unlikely to make any drastic moves on the yuan, such as a large one-off revaluation, in the near term.

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