The U.S. dollar edged lower in early European trade Tuesday, retreating from near three-month highs ahead of the release of a slew of key economic data this week.

At 03:10 ET (07:10 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 103.907, after slipping 0.2% on Monday.

Traders appear to have decided to book some gains at the start of a week that includes the release of several key economic data points, culminating on Friday with the widely-watched monthly employment report.

EUR/USD fell 0.1% to 1.0811, with German consumer sentiment seen falling in September, as the GfK's consumer sentiment index fell to -25.5 from a slightly revised -24.6 in August, as persistently high inflation weighs.

The August release of eurozone inflation is due later in the week, and the annual figure is expected to show a small drop to 5.1% from 5.3% in July, still well ahead of the central bank's 2% target.

Elsewhere, GBP/USD rose 0.1% to 1.2614, moving off two-month lows from last week, USD/JPY fell 0.1% to 146.44, close to a 10-month high, AUD/USD rose 0.2% to 0.6444, while USD/CNY traded flat at 7.2903.

Source : Investing.com