Investing.com - The dollar slipped lower against the other major currencies on Tuesday, but remained close to a seven-month peak as hopes that the Federal Reserve will raise interest rates at its meeting next month continued to support the greenback.
USD/JPY edged down 0.10% to 123.32, but was still close to Tuesday's one-week highs of 123.48.
Demand for the dollar continued to be underpinned by expectations that the Fed will hike rates before the years end.
Data on Tuesday showing that U.S. inflation rose in October following two straight months of declines hardened the view that the economy is on a strong enough footing for higher interest rates.
The Commerce Department said the annual rate of inflation rose 0.2% last month, while consumer prices were also up 0.2% from a month earlier.
The dollar turned slightly lower overnight as U.S. Treasury yields slid amid an increase in safe haven demand after a bomb scare in Germany triggered fears of another attack just days after the deadly terror attacks in Paris.
Investors were looking ahead to the minutes of the Fed’s October meeting, due out later in the day, for further indications on the prospects for a December rate hike.
EUR/USD rose 0.28% to 1.0671, off the previous session's six-month lows of 1.0630
The euro's gains were held in check as the European Central Bank is expected to expand its quantitative easing program and possibly cut rates further into negative territory at its December meeting.
The single currency also remained under pressure amid concerns that the terrorist attacks in Paris could undermine the already fragile economic recovery in the region.
Elsewhere, the dollar was lower against the pound and the Swiss franc, with GBP/USD up 0.10% at 1.5228 and with USD/CHF easing 0.09% to 1.0137.
The Australian and New Zealand dollars were steady, with AUD/USD at 0.7107 and with NZD/USD at 0.6474.
Meanwhile, USD/CAD inched 0.07% lower to trade at 1.3311.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.18% at 99.55 still close to the fresh seven-month high of 99.85 reached overnight.