Early trading in the European session saw the US dollar remain firm at two-month highs despite paring gains.
At the time of writing, the dollar index, which measures the greenback's strength, was trading at around 104.06 against a basket of major currencies.
Investors' focus is currently on US personal consumer expenditure (PCE) data, the inflation measure that is the Federal Reserve's (Fed) choice for interest rate considerations.
After looking at stronger data releases and FOMC minutes that showed Fed policymakers split, the market sees a 40% chance of another rate hike of 25 basis points at next month's meeting.
In the meantime, the market continues to follow the progress of the US debt ceiling negotiations which are said to have made progress even though they are still stuck on certain issues.
In the European session, the pound rose slightly on better-than-expected UK retail sales data in April, but remained stuck around seven-week lows against the US dollar.
Meanwhile, the euro remained at its weakest level in two months against the USD, in addition to being pressured by the gloomy outlook for the European Zone economy after Germany suffered a recession in the first quarter.
On the other hand, volatile sentiment continued to pressure the Aussie and New Zealand dollars to remain stuck at six-month lows against the greenback.
