The bomb went off in a busy commercial area where many day labourers, mostly Shias, often wait for work.
The US soldiers died in separate attacks across Iraq, the military said, taking the May death toll to 112.
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May has been the deadliest month for US troops since December, when the same number died.
Westerners seized
Meanwhile, armed men wearing police uniforms abducted at least three Western lecturers and several of their foreign bodyguards from a finance ministry building in central Baghdad on Tuesday, a witness said.
The witness, who did not want to be identified, said the lecturers, believed to be Germans, had been giving ministry personnel a lecture on organising electronic contracts.
The witness said the armed men, led by a police major, entered the conference room shouting, "Where are the foreigners, where are the foreigners?"
A fourth lecturer escaped being abducted because he was sitting apart from his colleagues.
Police said about 40 armed men sealed off streets around the three-storey computer science building belonging to the finance ministry before they went inside.
The British embassy declined immediate comment on media reports that the bodyguards were British.
The witness said the lecturers, employed by a US organisation, had given at least 12 lectures at the ministry over the past year.
Monday's violence
Dozens of people were killed and scores injured in attacks across Baghdad on Monday as well.
The deadliest attack was a car bombing in central Baghdad near the Abdul-Qadir al-Gailani mosque, the city's largest Sunni mosque that Shias also revere, killing 24 people and injuring scores, police say.
Fighters carried out several other car-bomb and mortar attacks throughout the capital.
Police said three civilians were killed and 10 wounded by a car bomb in Zaafarniya district in southeastern Baghdad, and a roadside bomb killed two people and injured nine when it exploded under a parked car in the central Baghdad district of Bab al-Muadham.
Also on Monday, police said they had recovered 33 bullet-riddled bodies in different parts of Baghdad.
The bodies were handcuffed, blindfolded and showed signs of torture.
Captives rescued
Separately, US forces announced they had rescued 42 Iraqi captives after raiding an alleged al-Qaeda prison camp north of Baghdad.
They said some of those freed showed signs of having been tortured for months.
Military officials said Sunday's operation was launched after a tip-off from local residents in Diyala province.
Many of the 42 civilians, including a teenager, showed signs of abuse including broken bones, bruises and heat injuries caused by dehydration.
Officials have refused to release details of the raid citing security reasons.