The US dollar hit a three-month low against several currencies on Tuesday as traders continued to reduce their long US dollar positions ahead of US and European zone inflation data this week.
The US dollar index, which measures the US dollar against six major currencies, traded at 102.875, lower than the 103.07 level recorded in Asian trade, the lowest since August 31.
The index lost more than 3% in November, which was also its worst performance of the year.
The euro and sterling remained steady overall with the currency trading at $1.0974 and the pound at $1.2656, both around their three-month highs.
Market expectations that the Fed's rate hike cycle has finally come to an end also put downward pressure on the US dollar. US rate forwards show about a 25% probability that the Fed could start cutting rates as early as March and rise to about 50% by May, based on the CME FedWatch tool.
Traders are keeping an eye on the US core personal consumption price index (PCE) this week for further confirmation that inflation is slowing.
On the other hand, after postponing its policy meeting until this Thursday, OPEC+ is considering further reductions in oil production. The yen was slightly firmer at 148.45 against the US dollar, continuing its recovery.
