The dollar fell against the euro and was little changed against the yen on Tuesday in a volatile session as investors debated the outlook for the U.S. economy while anticipating a rate hike of a quarter percentage to 4.25 percent from the European Central Bank later this week.

In early trading on Tuesday, the Japanese yen had climbed broadly, benefiting from mounting risk aversion as heightened fears of further losses in the banking sector and global stocks prompted investors to sell dollars. The U.S. dollar, euro and sterling retreated to day’s lows at 105.23, 166.16 and 210.09 versus Japanese yen respectively before rebounding as U.S. stocks market reversed from negative to positive territories, DJI rose 32.25 point and closed at 11382.26 after General Motors reported a stronger-than-expected June sales and a rise in U.S. factory activity (ISM manufacturing rose in June to 50.2 from 49.6 in May). The dollar last traded near flat at 106.10 against the Japanese yen, well off the session low of 105.23 whilst the euro rose to 166.62 yen.

In late New York trading, the single currency and sterling pared some gains against the greenback after the release of better-than-expected U.S. ISM manufacturing data and retreated from day’s highs at 1.5827 and 2.0008 respectively.

The greenback traded 0.1 percent lower against a basket of major currencies 72.369, starting the third quarter on the back foot. Futures on the Chicago Board of Trade show a 20 percent chance the Federal Reserve will raise its 2 percent target rate for overnight lending between banks by a quarter-percentage point on Aug. 5, compared with 38 percent odds a week ago.

On Wednesday, economic data releases include Australia retail sales, U.K. PMI construction, eurozone PPI data, U.S. ADP employment, factory orders and Durable goods revised data.