The US dollar pared some of its earlier gains as investors continued to await developments on US-China tensions and also focused on data to be published in the New York session.
Against most major currencies, the dollar index, which measures the strength of the greenback, traded slightly lower at 106.10.
The currency king had previously benefited from concerns over the Taiwan issue that had risen after US House Speaker Nancy Pelosi's visit to the country had angered China.
Concerned that the issue of misunderstanding between the world's two giant economies will worsen, investors continue to turn to safe-havens as protection.
In addition, the greenback dollar also received support from several statements by policy makers of the Federal Reserve (Fed) who are seen to still see the need to increase interest rates to curb soaring inflation.
Investors are now awaiting the publication of US ISM survey service PMI data which is expected to show a slight decline in July.
Looking at the development of European currencies, the euro traded slightly higher following the weakening of the US dollar while the pound was flat amid investor caution ahead of the Bank of England's (BOE) policy meeting on Thursday.
