WASHINGTON (dpa-AFX) - After holding near 2-month highs early on in the session on Tuesday, the U.S. dollar pared gains and stayed subdued during the later part, with traders looking ahead to the Federal Reserve's monetary policy statement.
Markets were also tracking news on U.S.-China trade talks, besides reacting to economic data from across the globe.
It is widely expected that the Fed will cut interest rate by 25 basis points tomorrow, but the focus is more on the post meeting comments from Fed chief Jerome Powell.
Powell's comments are expected to provide clues about the bank's outlook for further rate hikes this year and its overall views on economic growth.
A report from the National Association of Realtors showed pending home sales in the U.S. surged up by 2.8% to 108.3 in June after jumping by 1.1% to 105.4 in May. Economists had expected pending home sales to rise by 0.5%.
A report from the Conference Board said its consumer confidence index surged up to 135.7 in July after tumbling to a revised 124.3 in June. Economists had expected the index to climb to 125.0 from the 121.5 originally reported for the previous month.
Meanwhile, a report from the Commerce Department showed personal income in the U.S. climbed by 0.4% in June, matching the downwardly revised increase in May.
Economists had expected income to rise by 0.4% compared to the 0.5% growth originally reported for the previous month.
The report also said personal spending rose by 0.3% in June after climbing by an upwardly revised 0.5% in May. Personal spending had been expected to increase by 0.3% compared to the 0.4% advance originally reported for the previous month.
The dollar index, which advanced to 98.21 around late morning, edged down gradually to 98.02 and was last seen hovering around 98.05, little changed from previous close.
Against the euro, the dollar was down by about 0.1% at 1.1156, after being down at 1.1162 around late afternoon.
Eurozone economic confidence weakened to the lowest since March 2016, reflecting weakness across industry, services, retail trade and construction, survey results from European Commission showed.
The economic confidence index fell to 102.7 in July from 103.3 in June. This was the lowest since March 2016, when the reading was 102.3.
Germany's consumer confidence is set to fall in August on fears of a recession, with survey data from the market research group GfK showed.
The forward-looking consumer sentiment index came in at 9.7 in August versus 9.8 in July. This was the third decline in succession and the lowest since April 2017.
French GDP grew 0.2% sequentially in the second quarter, slower than the 0.3% expansion seen in the first quarter, data from the statistical office Insee showed. The growth rate was forecast to remain unchanged at 0.3%.
The dollar gained notable ground against Pound Sterling, strengthening to 1.2150, up around 0.55% from previous close. At one stage, the sterling was down sharply at 1.2120, hitting a new 28-month low amid concerns about a likely no-deal British exit from the European Union on October 31.
The yen weakened to 108.95 a dollar in early trades, but recovered well to trim losses as the day progressed. The Japanese currency was last seen moving around 108.60, gaining more than 0.15% in the process.
The Bank of Japan's policy significantly impacted the currency's movements. The central bank maintained its ultra-loose monetary policy, as widely expected, and lowered its inflation forecast.
The Policy Board of the BoJ maintained interest rate at -0.1% on current accounts that financial institutions maintain at the bank. The bank said it will purchase government bonds so that the yield of 10-year JGBs will remain at around zero percent.
Further, the bank will purchase JGBs in a flexible manner so that their outstanding amount will increase at an annual pace of about JPY 80 trillion.
The bank lowered its inflation forecast for fiscal 2019 to 1% from 1.1%. The bank also downgraded its growth outlook for the fiscal 2019 to 0.7% from 0.8% but retained its projection for the fiscal 2020 at 0.9%.
The dollar was down 0.14% and 0.13%, against the loonie and Swiss franc, respectively, at 1.3145 and 0.9903.
Against the Aussie, the dollar was up more than 0.4% with the AUD-USD pair at 0.6874.
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