The US dollar advanced against major currencies Tuesday as data showed US inflation rate increased in March.

The US Consumer Price Index for all urban consumers increased 0.2 percent in March on a seasonally adjusted basis, said the Labor Department. The inflation rate was 0.1 percent in February.

Analysts believe the data added more signs to larger consumer demand and eased concerns that inflation rate is too far below Federal Reserve's target of 2 percent.

Meanwhile, US builder confidence in the market for newly built, single-family homes edged up one point to 47 in April from a downwardly revised March reading of 46, according to the latest Housing Market Index by the National Association of Home Builders/ Wells Fargo.

The US dollar gained in the previous session, boosted by better-than-expected US retail sales data. The Commerce Department said Monday US retail sales jumped 1.1 percent in March, the biggest increase in one and a half years.

Moreover, the euro was under pressure after European Central Bank President Mario Draghi said during the weekend that "a further strengthening of the exchange rate would require further stimulus."

In late New York trading, the euro dropped to 1.3809 dollars from 1.3821 dollars of the previous session, and the British pound decreased to 1.6703 dollars from 1.6727 dollars. The Australian dollar slipped to 0.9355 dollars from 0.9413 dollars.

The dollar bought 101.83 Japanese yen, higher than 101.72 yen of the previous session. The dollar moved up to 0.8804 Swiss francs from 0.8797 Swiss francs, and it went up to 1.0981 to Canadian dollars from 1.0962 in the previous session.