The U.S. dollar declined against its key counterparts in the European session on Monday, ahead of the Federal Reserve's monetary policy decision this week, which is widely expected to signal a slower pace of hikes next year.
At the end of a 2-day meeting ending on Wednesday, the Fed is forecast to raise rates by a quarter percentage point for a fourth time this year.
The rate decision will be followed by a press conference from Chairman Jerome Powell, which will be closely scrutinized for indications on future rate hike plan.
Fears over a possible U.S. government shutdown also weighed, as the White House and lawmakers were unable to agree on a spending plan amid clashes about the Mexican border wall issue.
Unless the Congress reaches a resolution, parts of the federal government will shut down at midnight on Friday.
The currency was trading mixed against its major counterparts in the Asian session. While it held steady against the franc and the pound, it rose against the yen. Against the euro, it dropped.
The greenback dropped to 1.2647 against the pound, coming off from a high of 1.2571 hit at 5:00 pm ET. If the greenback slides further, it may find support around the 1.28 level.
The greenback slipped to a 4-day low of 0.9928 against the franc, from a high of 0.9985 seen at 5:30 pm ET. The greenback is seen finding support around the 0.98 region.
The greenback fell to 113.25 against the yen and 1.1354 against the euro, off its early highs of 113.52 and 1.1300, respectively. The greenback is poised to find support around 112.00 against the yen and 1.16 against the euro.
On the flip side, the greenback bounced off to 1.3394 against the loonie, 0.7174 against the aussie and 0.6801 against the kiwi, from its early lows of 1.3373, 0.7185 and 0.6818, respectively. The next possible resistance for the greenback is seen around 1.35 against the loonie, 0.70 against the aussie and 0.67 against the kiwi.
Looking ahead, Canada existing home sales for November, New York Fed's empire manufacturing survey and U.S. NAHB housing market index for December are due in the New York session.
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