The dollar was locked in recent ranges in muted trade on Tuesday, lifted by optimism that the U.S. tax reform bill would pass, but weighed by doubts about its ultimate effect on the economy.
The dollar index, a gauge of the strength of the U.S. currency against a basket of six major rivals, was steady on the day at 93.17. The Republican-controlled U.S. Congress appears set to pass sweeping tax legislation this week after two Senate Republican holdouts agreed on Monday to support a tax overhaul backed by President Donald Trump.
U.S. shares rose to record highs, as hopes of the bill's passage helped push them higher on Monday. A slew of corporate deals also helped lift sentiment. The Dow Jones industrial average jumped 140.46 points to 24,792.20, recording its 70th record close of the year. The S&P 500 gained 0.6 percent to a record closing high of 2,690.16, while the Nasdaq composite briefly escalated above 7,000 for the first time.
As Fed policymakers expect the tax reform to give a boost in the near-term to the U.S. economy, they estimate growth to ease back to about 2 percent by 2020 and not rise to around 3 percent as Trump and his administration predict.
USD/JPY rose 0.1 percent to 112.66, wandering in a range between its high of 113.750 hit last week and Friday's low of 112.035.
EUR/USD climbed above 1.1800 with worries of weak inflation and a flattening of the U.S. Treasury yield curve lifting the pair.
The Aussie dollar climbed up 0.1 percent against the US dollar. AUD/USD traded at 0.7673, just shy of six-week highs touched last week, as the country's central bank expressed greater confidence about the economic outlook.
