The US dollar continued to decline in the European session amid investor vigilance ahead of the FOMC policy meeting, while the Aussie dollar rose following statements from Chinese officials about the possibility of more stimulus being implemented.
Against a basket of major currencies, the dollar index that measures the strength of the greenback dollar traded lower at around 98.70.
The decline may be due to investors wanting to take the opportunity to post a profit by placing US dollar positions at lower prices.
With the Federal Reserve (Fed) expected to raise interest rates by 25 points, US 10 bond yields continue to remain at their highest level in more than two years.
The euro and pound took advantage of the depreciation of the US dollar to record gains, but failed to rise further by still stuck around the lows.
Meanwhile, the Aussie dollar posted modest gains after news agency XinHua reported that Vice Prime Minister Liu He said China would launch new policy measures that were profitable for its capital markets.
This was done to address the impact of the new wave of Covid-19 which put pressure on China's economic activity following more restrictions imposed in major cities.
The Canadian dollar rose higher against the US dollar ahead of the release of inflation data which is expected to continue to show gains in February amid a spike in energy prices.
