There were more losses for the Dollar on Tuesday ahead of inflation data from the U.S. that may show indications of weakening, whilst the Euro remained above parity on a hawkish stance from policymakers that rates would need to rise further.
The Dollar index stood at 108.2, after a 0.7% overnight loss, the largest daily decline since August.
The Euro increased 0.08% to $1.0130, after reaching close to a one-month high of $1.0198 in the previous session and gaining 0.76% overnight. Sterling moved up 0.07% to $1.1691, following a 0.86% overnight gain, the largest daily rise in a month.
In addition, the Japanese Yen was trading 0.2% higher at the time of writing at 142.53 per Dollar, bolstered by signals of intervention by officials.
U.S. inflation figures are due to be published on Tuesday, with the core inflation rate forecast to have increased 0.3% month-on-month. Recent gains in the greenback have decelerated on market forecasts peaking inflation will signify a less aggressive stance on rate hikes by the Fed, Reuters reports.
"The outcome of the CPI is going to be really important for the Fed … it would probably take an acceleration, a strong outcome in the CPI, to see them hike by 75 basis points," said Kristina Clifton, Commonwealth Bank of Australia senior economist and senior currency strategist.
"If we get a reading sort of broadly in line with what the consensus is expecting, we would say they would go for a 50 basis point increase."
The Euro has stayed above parity on comments from European Central Bank policymakers that Europe's benchmark rate could rise to 2% or more. "We definitely see downside to the Euro rather than upside … we're expecting the Euro to pull back down below parity and stay there for quite a while, particularly while all those issues around energy supplies are still at play," Clifton added.
Elsewhere, both the Australian and New Zealand Dollars edged down in Asian trading on Tuesday. The Aussie declined 0.27% to $0.6870, while the New Zealand Dollar moved down 0.15% to $0.6128.