The dollar softened against a basket of currencies on Tuesday, mirroring a dip in Treasuries yields as investors awaited key U.S. economic data before the Federal Reserve's monetary policy meeting next week.

The dollar index last sat around 105.57, having lost over 0.5% in the previous session as U.S. Treasury yields tumbled.

The greenback found support last week after Fed Chair Jerome Powell said U.S. economic strength might warrant tighter financial conditions, which pushed the benchmark 10-year yield above 5% to its highest since July 2007.

The euro was mostly flat at $1.0665, holding gains against the dollar on Monday.

Meanwhile, the dollar's retreat gave the battered yen some slight relief. The Japanese currency had hit the sensitive 150-level both on Friday and Monday and was last flat against the greenback at 149.77.

Traders see the 150 threshold as a possible line-in-the-sand for Japanese authorities to intervene in the currency market.

Source : Reuters