Markets awaited the conclusion of the Federal Reserve's December policy meeting on Wednesday U.S. time. The Fed is expected by most market watchers to raise interest rates by a quarter point.
Investors are also watching the Fed for clues about how the central bank will process possible changes to the U.S. tax system going forward. Decisions from other central banks, including the Bank of England and European Central Bank, are also expected in the week.
Meanwhile, investors also took note of a special Senate election in Alabama, which Democrat Doug Jones has been projected to win. If confirmed, the development will take the Republican Party's slim majority in the Senate down to 51 seats and could be a potential stumbling block as the GOP attempts to pass a tax reform bill.
The dollar index, which tracks the U.S. currency against a basket of six currencies, edged lower to trade at 93.975 at 3:21 p.m. HK/SIN after falling as low as 93.886 following the news. Against the yen, the greenback lost some ground to trade at 113.43.
"A lot of positive news is priced in the dollar and currency is vulnerable to disappointment," Giulia Specchia, an economist at ANZ, said in a morning note.
In currencies, the Australian dollar extended gains following a flurry of M&A news on Tuesday. The Aussie dollar traded at $0.7566 at 3:22 p.m. HK/SIN after climbing as high as $0.7580 in the previous session.
That move higher in the currency followed news of the Unibail-Rodamco acquisition of Westfield on Tuesday. Australian bank ANZ also said in the previous session that its life insurance business would be sold to Zurich Life.
Meanwhile, the New Zealand dollar traded at $0.6939 after touching a one-month high overnight. The currency was given a boost following the appointment of the Reserve Bank of New Zealand's new governor earlier this week.
In commodities, oil prices pared some overnight losses on Wednesday after data showed U.S. crude stocks fell more than expected. Also of note, the U.S. Energy Information Administration said Tuesday it expects U.S. oil production to rise sharply next year, Reuters reported. Prices had risen earlier this week following the closure of Britain's Forties Pipeline for repairs.
U.S. West Texas Intermediate edged up 0.77 percent to trade at $57.58 per barrel. Brent crude added 0.96 percent to trade at $63.95 after falling 2 percent in the previous session.