The dollar fell on Tuesday after manufacturing data in the world's largest economy showed weaker-than-expected performance, adding to the pressure on the Federal Reserve to cut interest rates at its monetary policy meeting later this month.

The dollar index, which measures the performance of the US currency against six major currencies, fell to 99.408 at the start of the Asian trading session after declining on Monday for the seventh consecutive session to reach its lowest level in two weeks during US trading hours as stocks and bonds declined.

Data released on Monday showed that the U.S. manufacturing sector contracted for the ninth consecutive month in November, with the Institute for Supply Management's manufacturing purchasing managers' index falling to 48.2 in November from 48.7 in the previous month.

Brian Martin, head of economics at ANZ Bank in London, said: To me, it all points to demand in the economy slowing down.

He added, “I truly believe the Federal Reserve needs to cut interest rates not just in December, but continue the cuts next year,” noting that he expects further cuts of 50 basis points in 2026.

The CME Group’s FedWatch tool shows that markets expect 88 percent of the time that the Federal Reserve will cut interest rates by 25 basis points at its next meeting on December 10, compared with 63 percent a month ago.

The dollar traded at 155.51 yen, little changed from its levels in late U.S. trading, after Bank of Japan Governor Kazuo Ueda said on Monday that the bank would weigh the pros and cons of raising interest rates at its next monetary policy meeting, which led to Japanese two-year bond yields rising above 1 percent for the first time since 2008.

The euro held steady at $1.1610 as talks continued to end the war in Ukraine.

European leaders joined forces to rally support for Ukrainian President Volodymyr Zelensky after US-Ukrainian talks to review a peace proposal that initially appeared to favor Russia, while US President Donald Trump's envoy headed to Moscow to brief the Kremlin on developments.

The pound traded at $1.3216 near its highest level in a month but has not changed much so far during the day.