Investing.com - The dollar pushed lower a basket of other major currencies on Tuesday, as investors continued to lock in profits from the greenback's recent rally while markets eyed the release of U.S. factory orders data later in the day.
USD/JPY slipped 0.12%, pulling away from 12-year highs of 125.06 hit earlier in the session.
The greenback strengthened broadly earlier, as upbeat data on U.S. manufacturing activity and construction spending bolstered expectations for higher interest rates.
The yen showed little reaction after Bank of Japan Governor Haruhiko Kuroda said Tuesday that it was important for currencies to reflect economic fundamentals.
EUR/USD rallied 1.03% to 1.1039 after data showed that euro zone consumer prices rose for the first time in six months in May.
The European Union’s statistics agency Eurostat said the euro zone consumer price index rose by 0.3% from a year earlier in May, following a flat reading in April. Economists had forecast an increase of 0.2%.
Underlying inflation, which excludes prices for energy, food and alcohol, also picked up. Annual core inflation rose 0.9% from a record low of 0.6% in April.
The euro’s gains were held in check however amid ongoing uncertainty over stalled negotiations on a cash-for-reforms deal for Greece.
Prime Minister Alexis Tsipras said Tuesday that Greece submitted a "comprehensive proposal" to its lenders late Monday and added that a decision on an agreement now rested on European political leaders.
Greece is due to make a €305 million payment to the International Monetary Fund on Friday but warned last month that it will be unable to make the repayment if a deal is not reached by then.
The pound was also higher, with GBP/USD rising 0.21% to 1.5234, while USD/CHF declined 0.49% to 0.9414.
Sterling gained ground after market research firm Markit and the Chartered Institute of Purchasing & Supply said that their U.K. construction purchasing managers' index rose to 55.9 last month from a reading of 54.2 in April. Economists had expected the index to improve to 55.0 in May.
The Australian and New Zealand dollars were stronger, with AUD/USD up 1.14% to 0.7692 and with NZD/USD gaining 0.49% to trade at 0.7122.
Earlier Tuesday, the Reserve Bank of Australia left its benchmark interest rate at a record-low 2.00% in a widely expected move, but said monetary policy will remain "accomodative," leaving the door open for further rate cuts.
Meanwhile, USD/CAD edged down 0.18% to 1.2497, pulling away from Monday's six-week highs of 1.2563.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.70% at 96.83, not far from last week's five-week highs of 97.88.