NEW YORK (CNNMoney.com) -- U.S. Treasury debt prices fell Tuesday, hurt by a bout of profit-taking amid perceptions that a three-month rally had pushed yields to expensive levels, which were unsustainable.

The dollar jumped against the euro and edged higher versus the yen.

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The 10-year Treasury note slipped 11/32, or $3.44 on a $1,000 bond, to yield 4.59 percent, up from 4.54 late Monday.

On Monday, Treasury benchmark yields fell as low as 4.53 percent, the lowest since late February.

The 30-year bond fell 13/32, or $4.00 on a $1,000 bond, to yield 4.72 percent, up from 4.69 the previous session. Bond prices and yields move in opposite directions.

The five-year note fell 8/32 to yield 4.56 percent, while the two-year note was down three ticks, yielding 4.71.

"It's profit-taking given the gains, to a large extent since the end of June, but even more significantly since last week," said John Canavan, an analyst at Stone & McCarthy Research Associates in Princeton, New Jersey told Reuters. "In addition, there is positioning ahead of the two year note auction."

Investors have embraced Treasurys lately on signs of weakness in the housing sector and other economic reports that have suggested the U.S. economy is experiencing a slowdown.

The recent data has also fueled speculation on Wall Street that the Federal Reserve will begin lowering interest rates.

"The market is now priced for the beginning of Fed rate reductions in 2006 and a gradual rate decline in 2007," Charles Lieberman, investment strategist for Advisors Capital Management told Reuters.

As expected, the Fed's policy makers voted to keep their overnight federal funds rate target at 5.25 percent last Wednesday, the level it reached in June after 17 straight increases stretching over more than two years.

But plenty of economic reports lay ahead this week for bond traders who are speculating about what the central bank's next move will be. Last month's new home sales reading will be released Wednesday, and core personal income and consumption for August, the Fed's favored measure of inflation, is due Friday.

In currency trading, the euro bought $1.268, down from $1.2759 late Monday. The dollar bought ¥117.9, up slightly from ¥116.50 the previous session.

Reuters contributed to this report

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