The Dollar was trading around a nine-month low against the Euro on Tuesday as traders focused on the likely Federal Reserve policy trajectory and risks of a U.S. recession.

Measuring the greenback against six rivals, the Dollar index fell 0.12% to 101.89, moving back towards the seven-and-a-half-month trough of 101.51 hits last week.

The Euro rose 0.08% to $1.0880, edging nearer to the peak reached on Monday of $1.0927, the strongest since April.

"The U.S. is no longer the cleanest shirt in the global economic laundry," said Ray Attrill, National Australia Bank's head of foreign-exchange strategy, who forecasts the Dollar index to drop to 100 by the end of March the Euro to hit $1.10.

"That's integral to our bearish U.S. Dollar view, that the U.S. is not going to be the global growth leader."

Traders forecast just two additional quarter-point rate increases by the Federal Reserve to a high of around 5% by June, with two subsequent quarter-point cuts before the end of the year. The Federal Reserve has stated further hikes of 75 basis points are on the cards.

In addition, the Euro has been bolstered by European Central Bank officials' comments indicating more aggressive policy tightening, Reuters reports.

On Monday, the President of the ECB, Christine Lagarde, said the bank would continue hiking rates quickly to slow down inflation.

"President Lagarde has been among the hawks, and so we are comfortable with our call for 50bp increases at the next two meetings," said Commonwealth Bank of Australia strategist Joseph Capurso.

Furthermore, USD fell 0.41% to 130.11 Yen, edging down following two sessions of robust gains.

The greenback fell to a low of 127.215 Yen last week, the weakest seen since May, ahead of a policy review by the Bank of Japan, where policy remained unchanged.

Elsewhere, the Pound was up 0.12% to $1.2391 at the time of writing. The Australian Dollar increased 0.18% to $0.7041, whilst the New Zealand dollar gained 0.27% to $0.6508.