The U.S currency eased on Tuesday as a sell-off in growth linked currencies waned and risk taking increased on expectations of a global economic recovery. The greenback had weakened earlier, with losses against the EUR recorded. Europe's currency edged above the $1.35 level, boosted by a stronger than expected rise in the closely watched ZEW gauge of German investor sentiment.

Against its counterpart in Canada the U.S. dollar weakened after that country's central bank signaled its willingness to tighten monetary policy. The U.S. dollar dropped 1.6% against the Canadian loonie after the decision, extending losses of about 0.3% before the central bank's statement was released. The greenback bought C$0.9991, pushing the Canadian currency back above parity, where one U.S. dollar buys one Canadian dollar.