The US dollar pared some losses at the opening of the European session after going through dismal trading in the previous session.
This follows investor vigilance ahead of an important event this week in Jackson Hole that will see Federal Reserve (Fed) Chairman Jerome Powell speak.
Also affecting the decline is the downgrade by S&P Global which indicates that uncertainty still surrounds the US banking sector.
S&P Global lowered its ratings on several mid-sized US banks, including KeyCorp, Comerica Inc, Valley National Bancorp and UMB Financial Corp.
It may also have an impact on US banking stocks in the upcoming New York session.
Against most major currencies, the dollar index, which measures the strength of the greenback, is trading at 103.20.
The benchmark 10-year US treasury yield hit a 16-year high of 4.36% before retreating slightly to 4.31%.
Tracking broader currency movements, the euro eased back after earlier gains in the European session saw it trade around 1.0900 against the greenback.
Trading of the pound retreated slightly after failing to break through the 1.2800 level that it touched at the opening of the session.
Also, the yen pared some losses after US bond yields retreated from their highs.
The market was slightly disappointed after the meeting between Japanese Prime Minister Fumio Kishida and central bank Governor Kazuo Ueda did not discuss the fall of the yen.
On the other hand, the Australian, New Zealand and Canadian dollars were trading higher after taking advantage of the earlier decline in the US dollar.
Data that can be focused on in the New York session are the Richmond Fed manufacturing index and US existing home sales data as well as speeches from several Federal Reserve policy makers.
