The dollar held steady against most major currencies on Tuesday, ahead of minutes from the Federal Reserve's March meeting that could shed light on when US interest rates will peak.
The dollar slid more than one percent against the euro on Monday on rising geopolitical concerns over Iran's nuclear programme and as investors sensed the cost of borrowing in the United States might not rise much further.
"People are holding off before the US data. The move we saw yesterday was very large, to some extent exaggerated by thin liquidity," said Adarsh Sinha, FX strategist at Barclays Capital.
"People might be hoping for a dovish minutes. There's still a lot of division over when they should stop hiking rates," Sinha said.
The minutes of the Fed's latest rate-setting meeting are due at 1800 GMT and investors are hoping for clues as to whether the central bank will continue raising rates beyond an expected increase in May.
Analysts said overall dollar sentiment would probably remain negative, with the dollar hitting a two-month low against the safe-haven Swiss franc as Iran tensions sent oil prices to record highs and gold to a fresh 25-year high above $618 an ounce.
"The sentiment is turning dollar negative - probably the biggest factor putting the dollar under pressure is the rise in oil prices and rise in gold prices," BNP Paribas senior currency strategist Ian Stannard said. "On oil - there's probably more of a risk aversion move taking place on the back of concerns with regards to supply which is a negative for the dollar," he added.
By 1140 GMT, the euro was at $1.2255, flat on the day, having gained around one percent on Monday. It was up 0.12 percent at 144.51 yen, closing in on the record high of 144.92 yen scored earlier this month. Most European markets were closed on Monday.
The dollar rose 0.12 percent on the day to 117.95 yen, up from around 117.79 yen in late New York trade on Monday.
The dollar was down a quarter of a percent against the Swiss franc at 1.2757 francs, after hitting its lowest level since early February at 1.2744 francs earlier in the session.
The dollar was pressured in Monday trading by a Friday Wall Street Journal report that said some Federal Reserve officials are not convinced they need to keep raising interest rate beyond an expected rate rise in May.
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