The dollar was still broadly higher against other major currencies on Wednesday, supported by the release of upbeat U.S. durable goods orders data and hawkish comments by Federal Reserve Chair Janet Yellen.
The greenback found support after the Commerce Department said durable goods orders rose more than forecast in August, recovering from a slump in the prior month and bolstering optimism over the U.S. economy.
The data came a day after Fed Chair Janet Yellen said the Federal Reserve needs to continue gradual interest rate hikes despite uncertainty about the path of inflation.
It would be "would be imprudent to keep monetary policy on hold until inflation is back to 2%," she said.
The U.S. dollar was also boosted ahead of a highly-anticipated U.S. tax plan, set to be unveiled on Wednesday. The plan has been developed over several months by six White House and congressional Republicans, with no input from Democrats.
On a less positive note, another report on Wednesday showed that U.S. pending home sales dropped more than expected last month.
The safe haven yen and Swiss franc remained weaker, with USD/JPY up 0.51% at 112.83 and with USD/CHF climbing 0.66% to trade at 0.9754.
However, geopolitical concerns lingered after U.S. President Donald Trump said on Tuesday that a military option for North Korea isn't the preferred choice but if this were to be the case, it would be "devastating" for Pyongyang.
EUR/USD declined 0.52% to 1.1733, its lowest since August 18, as investors were still digesting the fact that German Chancellor Angela Merkel will be facing months of coalition talks to try to form a stable government.
Political risk in Spain also weighed, with the Catalan government planning to hold a referendum on whether to break away from Spain on Sunday, despite opposition from Spanish authorities.
The pound was also lower, with GBP/USD down 0.50% at a nearly two-week low of 1.3391.
Elsewhere, the Australian dollar was lower, with AUD/USD down 0.25% at 0.7866, the lowest since August 16, while NZD/USD edged up 0.11% to 0.7216 ahead of the Reserve Bank of New Zealand's interest rate decision on Thursday.
Meanwhile, USD/CAD was up 0.14% at 1.2367, just off a three-week high of1.2413 hit earlier in the day.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.47% at 93.26 by 10:50 a.m. ET (14:50 GMT), its highest since August 31.
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