The dollar struggled against most currencies on Tuesday as investors were reluctant to make fresh bets ahead of the outcome of a Federal Reserve meeting expected to result in a reduction of its massive stimulus program.
The euro, on the other hand, rose after an upbeat German sentiment survey. The ZEW think-tank's poll of economic sentiment rose to its highest since April 2010, suggesting a growing sense of stability that could support German Chancellor Angela Merkel's chances of winning a third term in Sunday's elections. That enabled the euro to hit the day's highs against the dollar at $1.3369.
The euro's gains, however, were limited in the run-up to the Fed's two-day policy meeting, which started on Tuesday.
The euro last traded up 0.2 percent at $1.3358, nearing a peak of $1.3385 hit on Monday, its highest since late August.
Against the Japanese yen, the dollar was last up 0.1 percent at 99.12 yen, but was expected to stay below chart resistance around 100 yen. The dollar, however, remains undervalued against the yen at current prices, with a fair value of 104.85 yen, according to data from BNP Paribas.
The dollar index, a gauge of the greenback's value against six major currencies, fell 0.2 percent to 81.14, declining for a fifth straight session.
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