The dollar was stable on Tuesday, paring a modest portion of its recent losses as U.S. crude prices declined on talk of OPEC raising supplies.
The interest rate gap between the U.S. and E.U. may remain at its current level if commodity prices cool off, enabling the European Central Bank to hold off on raising rates in April.
The Federal Reserve is widely expected to go through with its controversial asset purchase program into June, regardless of food and energy inflation.
The dollar improved to $1.3865 versus the euro, before settling near $1.3920 later in the day. Earlier in the week, the buck touched a 4-month low of $1.4035.
On a day bereft of much first-tier economic news, its was revealed that German factory orders grew more than expected in January on higher domestic demand.
Factory orders grew by a seasonally adjusted 2.9 percent in January from the previous month, the Federal Ministry of Economics and Technology said.
The buck rose to a weekly high of $1.6125 versus the sterling, moving further away from last week’s yearly low of $1.6343.
Even with crude prices turning lower, the dollar was stuck three cents below par versus its petro-linked Canadian counterpart. The dollar reached its lowest level in almost three years last week.
Crude moved below $105 after a Kuwaiti official said that the cartel will consider making up for supplies from Libya that have been interrupted by the ongoing revolt against leader Moammar Qadhafi.