Dollar's Jittery Path Amid Fiscal Uncertainty and Moody's Downgrade

The dollar experienced a quiet trading session on Tuesday, following a week-long decline hindered by the Federal Reserve's cautious approach to the economy. The potential passage of a U.S. fiscal bill that could expand the deficit further complicated matters.

The greenback's broad sell-off on Monday was prompted by Moody's unexpected downgrade of the U.S. sovereign rating over deficit issues. Eyes are now on Washington's pivotal vote on President Donald Trump's proposed tax cuts, which analysts predict will significantly increase national debt.

With the Australian dollar maintaining most of its gains before the Reserve Bank of Australia's anticipated rate cut decision, the financial markets remain tense. Meanwhile, the U.S. dollar index has seen a substantial decrease this quarter, reflecting concerns over growing debt and trade disputes.

(With inputs from agencies.)