The U.S. dollar slipped slightly Tuesday against the euro, which edged up to just below US$1.30 after a survey showed German finance experts' outlook for Europe's biggest economy brightening.
The 12-country European currency stood at US$1.2975 in late-morning European trading, up very slightly from US$1.2972 in New York late Monday.
It rose to US$1.2997 earlier in the session after Germany's ZEW institute said its monthly economic confidence index rose to 35.9 in February from 26.9 in January. However, that lift was countered by government figures showing that the German economy slowed unexpectedly in the fourth quarter, contracting by 0.2 percent.
The dollar dropped against the Japanese yen, falling to 104.87 yen from 105.11 late Monday. However, it gained slightly against the British pound, which fell to US$1.8872 from US$1.8885.
The dollar has been fading after last a rally last week, which took off after U.S. President George W. Bush presented a budget promising cuts in government spending and the U.S. trade deficit narrowed in December.
However, financial markets appear not to have shaken off broader worries about the U.S. trade and budget deficits.