Investing.com - The dollar slid lower against the other major currencies on Tuesday, as investors prepared for the Federal Reserve’s monthly policy meeting, due to begin later in the day.
EUR/USD rose 0.21% to 1.1019, easing off Friday’s one-month lows of 1.0951.
Upbeat U.S. data released that week continued to support expectations for a rate hike by the U.S. central bank in the near future.
While most investors expect the Fed to leave its monetary policy unchanged this week, it could give hints on the timing of future rate hikes.
Meanwhile, USD/JPY tumbled 1.36% to trade at 104.35, the lowest since July 14.
The yen was boosted by a Nikkei report saying the Japanese government planned a direct fiscal stimulus of around 6 trillion yen ($56 billion) over the next few years, disappointing expectations for as much as 10 trillion to 20 trillion yen in fiscal stimulus.
The dollar had climbed to as high as 107.49 last week, as investors’ expectations had mounted for Tokyo to unveil an aggressive stimulus package.
Market players are also looking ahead to the Bank of Japan’s policy meeting later this week. The BOJ is widely expected to ease policy further at the conclusion of its meeting on Friday, which could include a rate cut deeper into negative territory and additional asset purchases.
The pound was steady, with GBP/USD at 1.3139, while USD/CHF slipped 0.21% to 0.9837.
Expectations for a rate but by the Bank of England at its August policy meeting mounted after the Financial Times reported that Martin Weale, a member of the BOE's rate-setting committee, dropped his opposition to an easing and now favored immediate stimulus.
The Australian and New Zealand dollars were stronger, with AUD/USD up 0.84% at 0.7533 and with NZD/USD rallying 1.23% to 0.7081.
Earlier Tuesday, Statistics New Zealand said the country’s trade surplus narrowed to NZ$127 million in June from NZ$358 million the previous month, compared to expectations for a trade surplus of NZ$125 million.
Elsewhere, USD/CAD slipped 0.17% to trade at 1.3197, off the previous session’s four-month peak of 1.3243.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.35% to 96.94, pulling away from Monday’s four-month highs of 97.62.