Tuesday saw the dollar hovering just below its five-week high, while the pound experienced a dramatic decline followed by a rebound as rising unemployment rates in Britain suggested that future rate increases by the BOE may not be as necessary to control inflation.

The dollar index, which gauges the value of the dollar to six key rival currencies, was down 0.14% at 102.29 after peaking at 102.75 in early trade on Monday, its highest level since April 10.

In addition to a "flight to safety" and shifting expectations about central bank policy, analysts say concerns about the debt ceiling are contributing to the recent rise of the dollar.

EUR/USD ticked up by $1.0893 largely ignoring a decline in investor confidence in Germany.

GBP/USD slid by 0.5% at $1.2460, further depreciated to 87.17 pence per euro following an unexpected increase in Britain's unemployment rate to 3.9% in the three months leading up to March as more people looked to re-enter the labor force.