The dollar strengthened slightly in early December trading, a historically difficult period for the US currency. G-10 currencies traded in tight ranges with little US data available and Federal Reserve officials in a quiet period ahead of next week's meeting. The Bloomberg Dollar Spot Index rose 0.1% in New York trading, after posting a slight gain on Monday.

"There is little room for the USD to extend this rebound at this point," given "Fed policy expectations/focus on a possible leadership change/seasonal trends," wrote Shaun Osborne, chief currency strategist at Scotiabank, on Tuesday.

This year's spot and options patterns on the BBDXY suggest that the move since Monday's open will see the greenback consolidate against major currencies ahead of next week's Fed policy decision.

The DXY index has fallen about 0.9% on average each December in data dating back to 1995.

The yen is headed for its first day of declines in four as the impact of Bank of Japan Governor Kazuo Ueda's comments about a December interest rate hike fades.

USD/JPY rose 0.4% to 156.14, heading for its best session in nearly two weeks. Yen traders heeded comments from the country's Finance Ministry advisory board, which said the government should remain cautious about rising debt service costs amid higher interest rates.

EUR/USD edged higher, up less than 0.1% at 1.1613, after a six-day rally, with a large options expiration seen at 1.1550.

EUR/GBP rose 0.1% to 0.8795, rising for a fourth day; the Bank of England warned of rising risks from a lucrative fixed-income hedge fund strategy known as basis trading.

Eurozone inflation edged up, supporting the European Central Bank's view that there is little reason to lower borrowing costs further.

The loonie and Aussie outperformed among the G-10; USD/CAD fell 0.1% to 1.3989 and AUD/USD rose 0.2% to 0.6557.

ANZ changed its call for an RBA rate cut and no longer sees a final rate cut in the first half of 2026 (alg)

Source: Bloomberg