The dollar slipped against a basket of currencies on Tuesday as traders booked profit-taking on bullish greenback bets following the Federal Reserve's interest rate increase last week and a steep drop in existing home sales in November. Commodity-linked currencies including the Australian and New Zealand dollars climbed sharply against the greenback as oil prices stabilized above 11-year lows and investors hoped for more official action to support growth in China.
"There's a lack of clear momentum for the dollar in the past week," said Brian Dangerfield, currency strategist at RBS Securities in Stamford, Connecticut. Traders have preferred to book their profits on their bullish dollar positions, which are supported by the Fed's widely expected rate hike and its signal to raise rates further in 2016, rather than building their long dollar bets, analysts said.
The dollar index, which measures the greenback against six currencies, fell 0.35 percent at 98.045. It declined three straight sessions and briefly broke below the 50-day moving average at about 98.02. The greenback fell 0.2 percent to 120.93 yen after touching its lowest level in a week earlier. "The trend is still dollar positive as long as the economy performs," Dangerfield said.