The dollar index, which measures the greenback against six major peers, was up 0.01 per cent to 98.0562 at 3:00 p.m. (local time).
The US central bank kicked off its two-day monetary policy meeting on Tuesday and will announce its decision on whether to adjust interest rates Wednesday afternoon, the Xinhua news agency reported.
Investors are speculating that the Fed would cut interest rates this week for the first time in more than a decade by 25 basis points.
On the data front, US personal income increased 0.4 per cent in June while inflation remained below the target set by the Federal Reserve, the US Department of Commerce said on Tuesday.
Personal consumption expenditures (PCE), a measure of household spending, were up 41 billion dollars in June, according to a monthly report released by the Bureau of Economic Analysis of the department.
On a year-on-year basis, the core PCE price index, a preferred inflation gauge by the Fed, which stripes out food and energy, was up 1.6 per cent in June, below the central bank's target inflation rate of 2 per cent.
In late New York trading, the Euro was up to 1.1156 dollars from 1.1146 dollars in the previous session, and the British pound decreased to 1.2161 dollars from 1.2223 dollars in the previous session. The Australian dollar was down to 0.6874 dollar from 0.6901 dollar.
The dollar bought 108.60 Japanese yen, lower than 108.80 Japanese yen of the previous session. The dollar was down to 0.9902 Swiss franc from 0.9915 Swiss franc, and it was down to 1.3152 Canadian dollars from 1.3162 Canadian dollars.
( With inputs from IANS )