The dollar has enjoyed a modest rebound since late last week, when China cut interest rates for the sixth time in less a year and the European Central Bank hinted it may expand its bond purchase program. There is broad consensus the Federal Open Market Committee will refrain from ending its near-zero interest rate policy after its two-day meeting concludes on Wednesday. The US central bank's policy-setting group may still hint at the possibility of a rate hike at its December meeting.
"The data has been consistently negative since the (Fed's) last meeting. That combined with oil prices and the risk of inflation in the future is collectively going to discourage the Fed from being overly hawkish," said Kathy Lien, managing director of FX strategy at BK Asset Management in New York. The dollar index was up 0.08 percent at 96.937, not far below a 2-1/2 month peak of 97.201 struck on Friday. The euro slipped 0.2 percent to $1.1038, but the greenback fell 0.5 percent to 120.41 yen. The Norwegian crown fell more than 1 percent to a three-week low against the dollar at 8.4691 crowns as investors bet cheaper crude may lead its central bank to loosen policy further. Canada's currency also weakened. Canada's dollar reached C$1.3242 to the US dollar, its weakest since early October. Russia's ruble fell nearly 3 percent to 64.745 rubles per dollar.