The dollar suffered losses in early trading on Tuesday after a slight increase in risk appetite but was trading in narrow ranges unlike other major currencies ahead of key inflation data from major economies this week that markets are looking to for clues on global interest rate expectations.
Currency moves were largely muted in early Asian trading hours after a quiet session overnight due to holidays in Britain and the United States, but the overall mood was positive as global stocks rose.
The euro rose to $1.0860 despite some cautious comments from European Central Bank policymakers on Monday and data showing German business confidence fell in May.
Markets are awaiting German inflation data due on Wednesday and broader eurozone data on Friday for confirmation of the European Central Bank's expected interest rate cut next week and for clues on how quickly the bank could make a subsequent cut.
The pound held steady near its highest level in more than two months, last trading at $1.2774, while the New Zealand dollar rose about 0.1 percent to $0.6155, its strongest level since mid-March.
The Australian dollar rose 0.03 percent to $0.6657.
Markets are mainly focused on the US core PCE price index report, the Federal Reserve's preferred inflation gauge, which is expected to remain unchanged on a monthly basis.
US interest rate expectations have been the main driver of the currency over the past few years, and recent inflation reports from the world's largest economy have been volatile, dampening policymakers' confidence in the pace and size of expected rate cuts this year.
Against a basket of major currencies, the dollar index fell 0.01 percent to 104.55 points.
The yen fell to near 157 to the dollar and was last trading at 156.87 to the dollar after the Japanese currency was on track to achieve its first monthly gain of 2024.
As for cryptocurrencies, Bitcoin fell 0.47 percent to $69,255, while Ethereum fell 0.2 percent to $3,882.20.
