The US dollar retreated from 20-year highs against its main rival on Tuesday, likely due to profit-taking activity by investors ahead of the end of August trading.
In addition, investors may also start to be cautious ahead of the release of this week's main focus data, which is the US NFP jobs report.
Even so, the hawkish stance of Federal Reserve (Fed) Chairman Jerome Powell still supports the king of the currency to remain high.
Against most major currencies, the dollar index, which measures the greenback's strength, traded lower at 108.65 at the start of the Asian session.
Following Powell's remarks at the Jackson Hole symposium last week, expectations for a 75 basis point interest rate hike have now risen above 70% according to the CME FedWatch tool.
Meanwhile the European Central Bank (ECB) is predicted to make the same hike with a higher probability of 67%, up from 48% on Friday.
ECB officials also hinted at implementing a bigger increase in interest rates at the next September meeting even though it is now at risk of facing the threat of recession in Europe.
This again supported the euro currency to rise at 1.0000 and also stole the opportunity from the depreciation recorded by the US dollar, with the focus of investors now directed to the publication of the preliminary German inflation reading data for August.
For greenback dollar investors, attention will be paid to the release of JOLTS job opening data and US consumer confidence in the New York session.
In the meantime, the pound traded slightly higher, but remained weak at the lowest level since March 2020 with expectations that it will continue to be gloomy following the absence of key data from Europe.
