The dollar remained on the back foot against the euro ahead of U.S. existing home sales data, as attention continued to focus on interest rate differentials between the two areas. Comments from governing council members Yves Mersch and Christian Noyer have raised speculation the European Central Bank (ECB) might consider increasing interest rates to keep inflation in check rather than simply keeping them on hold. This is in stark contrast to the U.S. where the Federal Reserve has cut rates aggressively. "More hawkish lines have been thrown to the market from ECB policy makers, this time from Christian Noyer and Yves Mersch," said Peter Stoneham, an analyst at Thomson IFR Markets. "With Klaus Liebscher and Axel Weber setting the rate tightening tone Monday, the stacking up of fresh hawkish rhetoric has helped to drive the euro" from the low of around 1.583 seen in Asian trade, said Stoneham. Disappointing first-quarter earnings released Monday by major U.S. bank Bank of America also continued to add pressure on the dollar. Attention will turn later to economic data from the world's largest economy, with the release of U.S. existing home sales for March. Existing home sales data are expected to have fallen to 4.950 million in March from 5.030 million the previous month. Elsewhere, the pound bounced higher after a Monetary Policy Committee (MPC) member said the Bank of England's liquidity scheme announced Monday will help the rate setting committee to keep its focus on the job of keeping inflationary pressures in the UK economy in check. Tim Besley, one of the four external members on the MPC, said the scheme should "allow the MPC to stay more focused on its task of using monetary policy to target inflation." The pound had been under pressure on Monday following the announcement of the scheme as market players viewed the plan with skepticism and expressed concern over its expense. "The tone of the Besley remarks is hawkish but measured and should at least afford the struggling pound some room to pause," said Thomson IFR Markets' Stoneham.