The dollar retreated from a two-week top against its major peers on Thursday as investors trimmed bets that the Federal Reserve will raise interest rates this month, though the looming debt ceiling deadline gave safe haven support to the greenback.
A divided U.S. House of Representatives passed a bill to suspend the $31.4 trillion debt ceiling on Wednesday, with the focus now on how it will fare in the Democratic-led Senate just days before the federal government is expected to run out of money to pay its bills.
The dollar was mixed in Asia trade and barely reacted to the vote, with the euro rising 0.04% against the greenback to $1.06895.
Sterling slipped 0.01% to $1.2440.
The U.S. dollar index rose 0.06% to 104.21, though was still down from an over two-month high hit in the previous session, as traders pared back their expectations of another rate hike by the Federal Reserve this month.
Fed officials including the vice chair-designate pointed towards a rate hike “skip” in June, giving time for the U.S. central bank to assess the impact of its tightening cycle thus far against still strong inflation data.