The dollar index, which measures the greenback against six major peers, was down 0.39 percent to 102.1670 in late trading.
Federal Reserve Bank of Richmond President Thomas Barkin on Tuesday cheered the central bank's progress on bringing down inflation.
"We're seeing good progress but the data has jumped around," Barkin said. "I think we're nicely positioned now with a 3 percent inflation rate moving down, and a 3.7 percent unemployment rate staying relatively steady."
U.S. Treasury yields for 2-, 5- and 10-year bonds, currently trading at 4.43 percent, 3.90 percent and 3.91 percent respectively, are experiencing a downtrend, which lowers the demand for the U.S. dollar.
Housing starts in the United States surged 14.8 percent in November to 1.56 million units, the monthly data published by the U.S. Census Bureau revealed on Tuesday. In the same period, building permits declined 2.5 percent after rising 1.8 percent in October.
While in the eurozone, annual inflation fell to 2.4 percent in November, according to official statistics from Eurostat, down from 2.9 percent in October. In late New York trading, the euro increased to 1.0976 U.S. dollars from 1.0916 dollars in the previous session, and the British pound was up to 1.2723 U.S. dollars from 1.2639 dollars in the previous session.
The U.S. dollar bought 143.8960 Japanese yen, higher than 142.8940 Japanese yen of the previous session, as the Bank of Japan decided not to raise interest rates in its last meeting of 2023.
The U.S. dollar was down to 0.8608 Swiss francs from 0.8685 Swiss francs, and it fell to 1.3335 Canadian dollars from 1.3393 Canadian dollars, as Canada's annual inflation rate unexpectedly held steady at 3.1 percent in November. The U.S. dollar fell to 10.1683 Swedish kronor from 10.2207 Swedish kronor.
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