The dollar is retreating from recent gains as investors hope that an aid deal for Greece will come out of a meeting of European Union officials later this week, helping to contain the European debt crisis.
Fears that a Greek default could set off a banking crisis caused borrowing costs to spike in Spain and Italy, two much larger economies that may be too expensive to rescue with current emergency aid funds.
Credit Suisse currency analysts say policymakers have signaled that a deal for Greece is close and that it will be approved at Thursday's meeting.
In morning trading Tuesday in New York, the euro rose to $1.4175 from $1.4090 late Monday. The British pound is gaining against the dollar and U.S. currency is lower against the Japanese yen.