The dollar fell across the board on foreign exchanges on Tuesday as investors took profits on gains for the greenback during the recent equity market correction.
As stocks fell dramatically in the first days of February, many equity indexes falling by 10% or more - a level often described as a market correction - the dollar picked up demand from investors looking for havens from the sell-off.
The dollar is often seen as a haven in times of market turmoil - particularly through the purchase of US Treasuries, deemed among the safest assets available.
Indeed, during the period in which the S&P 500 index in the US lost 10.16%, the dollar index - a measure of the US currency's relative strength against a basket of six rivals - rose 1.54%.
On Tuesday, however, the dollar was unwinding some of these gains as stability appeared to be returning to equity markets after both the S&P 500 and the Dow Jones Industrial Average notched up their biggest two-day percentage gains since June 2016.
The dollar index fell 0.41% to 89.84. Among the major dollar crosses, the euro was up 0.28% to $1.2326, the pound gained 0.22% to $1.3868. The dollar fell 0.92% against the yen to Y107.67 and lost 0.5% to SFr0.9346 versus the Swiss franc.
"The dollar is appearing at risk to withdrawing some of its gains over the past week, as investors eagerly await the upcoming inflation data release due from the United States on Wednesday," said Jameel Ahmad, head of currency strategy at FXTM.
"Whether more assurances that the Federal Reserve will resume its commitment towards higher US interest rates is enough to convince investors to repurchase the dollar at these lower levels remains to be seen."