Dollar weakens after Treasury boosts long-dated bond repurchases

Markets are also eyeing minutes from the Fed's last policy meeting to better understand officials' thinking on interest rates. The Fed minutes are set to be released at 2 p.m. ET (1800 GMT) on Wednesday.

Data released during recent weeks pointed to a softer U.S. economy, including unexpected job losses in July and mild inflation readings, leading investors to scale back rate-hike bets.

"There's this belief that there's not going to be much hawkishness in there or much detail about hiking for the remainder of the year. That hurts the dollar as well," Perez said.

The Japanese yen JPY=EBS strengthened 0.77% to 158.36 per dollar, pulling away from the closely watched 160 level after giving back much of its intervention gains.

The dollar index =USD, which measures the U.S. currency against six major peers, was down 0.72% at 98.93, dropping to its lowest since late May.