LONDON - The dollar slipped on Tuesday but struggled to gain momentum, with most major currency pairs little changed as investors waited for major central bank meetings this week and next to indicate the direction of currency markets.
The Bank of Canada meets on Wednesday, then the Bank of Japan and European Central Bank meetings are on Thursday. Next week the Reserve Bank of Australia meets on Tuesday, the US Federal Reserve on Wednesday, and the Bank of England and Norges Bank on Thursday.
In equity markets there were signs of improved risk appetite due to strong earnings, with European stocks opening higher following a rally in the Asian session.
But the dollar index held steady, down 0.1 percent at 93.724 at 1132 GMT.
Simon Harvey, a currency analyst at Monex Europe, said that a flattening of the US yield curve also contributed to the dollar's downward move, by improving risk appetite.
The greenback rose 0.2 percent against the Japanese yen, with the pair at 113.930, holding below the four-year high of 114.695 reached last week.
The Bank of Japan is set to maintain its massive stimulus program and slash this year's inflation forecast in a sign it has no intention to follow other central banks that are preparing exits from crisis-mode policies.
The Canadian dollar was steady ahead of Wednesday's meeting, at which the central bank is expected to raise its inflation forecast and to largely end stimulus from its pandemic-era bond buying program, starting a tentative countdown to the first interest rate hike since October 2018.
The Australian dollar, seen as a liquid proxy for risk appetite, was up 0.3 percent at $0.75155. Last week, it rose above the key $0.75 level for the first time since July.
"If the rally on the commodity market continues, AUD is likely to remain supported for now," wrote Commerzbank strategist You-Na Park-Heger in a client note.
The New Zealand dollar was up 0.4 percent at $0.71895.
The euro was up 0.1% at $1.162. Expectations that the European Central Bank will take a dovish stance when it meets on Thursday have weakened the euro in recent sessions.
"We believe that there is a good chance that the ECB will push back against current market pricing for ECB rate hikes," wrote MUFG currency analyst Lee Hardman in a note to clients.
"The ECB's continued reluctance to raise rates should continue to weigh on the euro as other G10 central banks embark on hiking cycles."
ING strategists noted that, so far in 2021, energy-exporting currencies whose central banks are preparing to tighten - such as the Canadian dollar or Norwegian crown - have outperformed.
"The worst performers in the G10 space are the JPY and the EUR, both net energy importers, suffering the negative income shock from higher energy prices and with some of the most dovish central banks in the world," they wrote in a note to clients.
"Low energy inventories for both gas and crude and no signs that supply frictions are going to be eased anytime soon suggests this story should continue to play out."
China's offshore yuan was a touch stronger against the dollar, with the pair changing hands at 6.3771.
A call between China's Vice Premier Liu He and US Treasury Secretary Janet Yellen was seen as positive for Sino-US relations.
Bitcoin was down around 0.6 percent at $62,742.65 at 1138 GMT, having fallen below the all-time high of $67,016.50 it reached last week.
(Reporting by Elizabeth Howcroft; editing by John Stonestreet and Angus MacSwan)