Investors and traders believed that the Fed cutting interest rates would become a certainty in July, as the probabilities of "ease" in Fed's interest rates remained 100 per cent on Monday, according to the CME Group's FedWatch tool, the Xinhua news agency reported.
Such widespread expectations have put a damper on the greenback since the central bank decided to hold its benchmark rates steady and hinted at future rate cuts last week.
US President Donald Trump signed an executive order on Monday to impose additional economic sanctions on Iran, including sanctions on Iran's Supreme Leader Ayatollah Ali Khamenei and many others.
The US President claimed Monday's move came after "a series of aggressive behaviours by the Iranian regime in recent weeks," including the shooting down of a US drone.
The dollar index, which measures the greenback against six major peers, decreased 0.24 per cent at 95.9838 in late trading.
In late New York trading, the euro rose to 1.1400 dollars from 1.1368 dollars in the previous session, and the British pound was up to 1.2742 dollars from 1.2735 US dollars in the previous session. The Australian dollar was up to 0.6966 dollar from 0.6926 US dollar.
The US dollar bought 107.31 Japanese yen, lower than 107.41 Japanese yen of the previous session. The US dollar decreased to 0.9721 Swiss franc from 0.9769 Swiss franc, and it decreased to 1.3188 Canadian dollars from 1.3209 Canadian dollars.
( With inputs from IANS )