Investing.com - The dollar dipped against a basket of the other major currencies on Tuesday as investors awaited comments later in the day by U.S. Federal Reserve Chair Janet Yellen.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, edged down to 97.05 by 07.03 GMT (03.03 ET).
The dollar pulled back from five-week highs against the yen, with USD/JPY down 0.2% to trade at 111.65.
Traders were waiting to see if Yellen would maintain a positive outlook on the U.S. economy despite a recent batch of weak economic reports, which would support the Fed’s projection for one more rate hike this year and three rate hikes next year.
Recent weakness in economic reports have raised questions over the Fed’s plans to tighten monetary policy, with investors now expecting that the pace of its tightening could be much slower than policymakers want.
The dollar touched session lows on Monday after data showed that U.S. durable goods orders unexpectedly fell by 1.1% in May after declining 0.9% in April, pointing to a loss of momentum in the manufacturing sector.
Futures traders are pricing in less than a 15% chance of a hike at the Fed's September meeting, according to Investing.com’s Fed Rate Monitor Tool. Odds of a December increase are seen at about 35%.
The euro was a touch higher, with EUR/USD at 1.1190, holding above Monday’s lows of 1.1171.
The euro ended Monday’s session lower after European Central Bank President Mario Draghi defended its monetary stimulus program and rejected calls to begin scaling back stimulus, arguing that premature tightening would lead to a fresh recession.
Sterling was little changed against the dollar, with GBP/USD at 1.2721 as the Bank of England prepared to release its financial stability report later in the day, followed by a press conference with Governor Mark Carney.