The U.S. dollar fell slightly on Tuesday, giving back early gains as investors remained cautious after the White House summit on Ukraine ended.
The U.S. Dollar Index, which tracks the greenback against a basket of six major currencies, fell 0.1% to 97.920, after posting slight gains overnight.
U.S. President Donald Trump told Ukrainian President Volodymyr Zelensky on Monday that the United States would help guarantee Ukraine's security in any deal to end the war with Russia.
While this was welcomed news, uncertainty still looms, especially as no ceasefire has been agreed so far.
Aside from geopolitical factors, traders are also cautious ahead of the Federal Reserve's Jackson Hole Symposium this week, where Chairman Jerome Powell is expected to deliver a speech on the economic outlook on Friday.
Earlier, Federal Reserve Governor Michelle Bowman, one of two members who voiced opposition to a rate cut at last month's meeting, is expected to speak early Wednesday morning.
The market is currently pricing in an 83% chance of a 0.25-point rate cut at the next Fed policy meeting scheduled for September.
"We expect support for the US dollar to weaken ahead of the FOMC minutes as the risk is that more members may be open to a rate cut and ahead of the Jackson Hole Symposium," ING added.
In Europe, EUR/USD rose 0.1% to 1.1677, as the euro strengthened after European leaders met in Washington to discuss a peace deal for Ukraine.
"We see potential upside for EUR/USD throughout the week. A return to levels above 1.1700 is still possible before the week ends," ING said.
However, if a Ukraine deal is reached and European countries have to shoulder the burden of costs and responsibilities, then a wave of relief in the market could cause outflows from the euro and pound.
The GBP/USD pair rose 0.1% to 1.3520, ahead of the release of key UK inflation data on Wednesday.
Traders are now trying to hedge against geopolitical risks stemming from the Russia-Ukraine talks, while awaiting the Federal Reserve's expected policy direction at the Jackson Hole Symposium.
