The US Dollar held steady in Asia trading on Tuesday yet didn't shift too far from five-week lows.

The Dollar made a 0.1% gain against the Euro to $1.0712, with a further advance on both the Australian and New Zealand Dollars, yet held at 131.24 Yen, just over a five-week dip of 130.55. The Pound fell 0.1% to $1.2260, whilst the Dollar index edged up 0.06% to 103.40. 

"Volatility in rates and the broader asset markets has been extraordinary recently," according to John Velis, BNY Mellon's FX and macro strategist for the Americas.

"That has clouded the picture for the March (Fed) meeting and beyond. One consequence has been a substantial repricing ... regarding future rate expectations," he added, with the peak seen at 5.5% a matter of weeks ago, compared to the current 4.8% level. 

Furthermore, markets are pricing in a 25% chance the Federal Reserve will stand pat when Wednesday's monetary policy decision is announced, Reuters reports, with a 75% chance of a 25-basis point hike, according to the CME FedWatch tool. 

Elsewhere, in Australia, minutes revealed the central bank had agreed to consider a rate pause at next month's meeting before the recent volatility saw the Australian Dollar fall 0.5% to $0.6686. 

The announcement of UBS's takeover of Credit Suisse over the weekend led to a degree of relief. Yet, the sentiment is still precarious as investors wrestle with bank stress that has escalated from weakness within regional US banks to the Credit Suisse situation within days. 

"Markets remain nervous, but the rapidity of policymakers' response to the evolving banking sector risks is heartening," said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.

Moreover, the Fed and other central banks said they would offer daily currency swaps to boost Dollar liquidity, the Reuters report adds. 

"There has been pretty modest demand for US Dollars at the Fed swap lines, so that is a positive sign in and of itself," according to Commonwealth Bank of Australia currency strategist Carol Kong.

"But there continues to be some signs of stress in funding markets ... so currencies will continue to be pretty cautious," she continued.