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The U.S. dollar edged lower in choppy trade against a basket of currencies on Tuesday, choking off a recent rally fueled by dollar bears taking profits on short positions, while investors watched talks in Washington on the next round of coronavirus relief.

After its biggest monthly decline in a decade in July, the greenback started August on a firmer note as some investors trimmed short positions.

But the immediate outlook for the dollar remains tied partly to relief aid talks in Washington and the economic impact of new virus cases in the United States.

The White House and Democratic congressional leaders have reported some progress in discussions over a fifth major coronavirus aid bill, but they remain apart on a range of issues.

The U.S. Dollar Currency Index, which measures the greenback’s strength against six major currencies, was 0.16% lower after rising 0.6% over the previous two sessions.

Despite a slowdown in new U.S. virus cases and encouraging factory data, investors remained concerned about the U.S. economy. The next big U.S. data points will be weekly jobless claims and the July U.S. employment report this week, said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 93.212 after declining from levels above 93.6 seen earlier.

Reference: CNBC