U.S. Dollar Halts Rally Against Majors

The U.S. dollar weakened against its major counterparts in the European session on Tuesday, as less hawkish comments from policymakers of the Federal Reserve weighed on the currency.

Cleveland Fed President Loretta Mester said on Monday that although the central bank will be raising the funds rate, it would be appropriate to slow down the pace of increases.

Atlanta Federal Reserve President Raphael Bostic said he favors slowing the pace of interest rate increases, with no more than 1 percentage point more of hikes.

The benchmark yield on the 10-year treasury note fell to 3.789 percent. Yields move inversely to bond prices.

The minutes from the Fed's latest policy meeting are due out on Wednesday.

The greenback edged down to 1.1884 against the pound and 0.9553 against the franc, from its previous highs of 1.1810 and 0.9591, respectively. The greenback is seen locating support around 1.27 against the pound and 0.92 against the franc.

Reversing from its early highs of 1.0238 against the euro and 142.24 against the yen, the greenback dropped to 1.0286 and 141.17, respectively. The greenback may test support around 1.08 against the euro and 118.00 against the yen.

The greenback moved down to 1.3394 against the loonie, 0.6154 against the kiwi and 0.6649 against the aussie, down from its prior highs of 1.3453, 0.6095 and 0.6599, respectively. The greenback is likely to find support around 1.29 against the loonie, 0.64 against the kiwi and 0.69 against the aussie.

Looking ahead, Canada retail sales for September and new housing price index for October will be featured in the New York session.

Eurozone flash consumer sentiment index for November is set for release at 10:00 am ET.