The dollar edged broadly lower on Tuesday but traded in a narrow range, as investors remained cautious ahead of key U.S. inflation data due later in the day just as the Federal Reserve kicks off its two-day monetary policy meeting.
The U.S. Labor Department's CPI report is expected to show that inflation cooled slightly in May, which could give the Fed room to pause its aggressive rate-hike cycle when it announces its interest rate decision on Wednesday.
Markets are currently pricing in an 80% chance that the Fed will keep rates on hold at this week's meeting, according to the CME FedWatch tool.
Those expectations kept risk sentiment buoyant, pinning the U.S. dollar near multi-week lows against the risk-sensitive Australia and New Zealand dollars.
The Aussie was last 0.04% higher at $0.6753, after hitting a one-month top of $0.6774 in the previous session.
The kiwi steadied at $0.6123, not far from Monday's peak of $0.6153, its highest since May 24.
Elsewhere, sterling rose 0.07% to $1.2520, after scaling a one-month peak of $1.2600 on Monday on hawkish comments by Bank of England policymakers, who said interest rates may have further to rise as inflation remains sticky.
The euro gained 0.04% to $1.0760, with traders also focused on Thursday's interest rate decision from the European Central Bank, following its policy meeting.
Against the Japanese yen , the dollar rose 0.02% to 139.63.
The U.S. dollar index edged marginally higher to 103.59, after falling to 103.24 on Monday, its lowest since May 23.
The Bank of Japan (BOJ) is due to announce a monetary policy decision on Friday, when it is expected to maintain its ultra-dovish stance and yield curve control (YCC) settings.
Source : Reuters
