The U.S. dollar extended its decline against the other major currencies in early European trading on Tuesday, following the releases of weak economic data from the U.S. released overnight, that pared expectations for a June rate hike.

Data from the Institute for Supply Management showed that U.S. manufacturing activity grew slower than expected in the month of April.

The ISM said its purchasing managers index dipped to 50.8 in April from 51.8 in March, although a reading above 50 indicates growth in the manufacturing sector. Economists had expected the index to edge down to 51.5.

Data from the Commerce Department showed that the U.S. construction spending increased less than expected in the month of March.

The construction spending rose 0.3 percent to an annual rate of $1.138 trillion in March from a revised $1.134 trillion in February. Economists had expected spending to increase by 0.5 percent.

These weak data coming on the heels of dovish Fed statement and disappointing economic growth data released last week fueled hopes that the Federal Reserve is likely to hike interest rates only twice this year.

Investors await the non-farm payrolls report for April due on Friday, ADP's private payrolls, considered precursor to the NFP data, and the results of the Institute for Supply Management's non-manufacturing survey, scheduled for release on Wednesday, for more clues about the economy.

Yesterday, the greenback fell by 0.8 percent against the euro, 0.44 percent against the pound and 0.48 percent against the franc on speculation that the Fed will raise rates slowly.

The greenback has been trading in a negative territory in Asian trading.

The greenback fell to a 3-week low of 0.9512 against the franc and a 4-month low of 1.4740 against the pound, from its early highs of 0.9554 and 1.4660, respectively. If the greenback extends slide, it may find support around 0.94 against the franc and 1.49 against the pound.

The greenback slipped to more than an 8-month low of 1.1571 against the euro, 1-1/2-year low of 105.72 against the yen and more than a 10-month low of 1.2475 against the loonie, off its previous highs of 1.1521, 106.46 and 1.2538, respectively. The greenback may find support around 1.17 against the euro, 104.00 against the yen and 1.22 against the loonie.

Looking ahead, U.K. manufacturing PMI for April and Eurozone PPI for March are due shortly.

At 10:30 am ET, Federal Reserve Bank of Cleveland President Loretta Mester speaks in a panel discussion titled "Unconventional wisdom: How will unusual monetary policy affect market liquidity" at the Atlanta Federal Reserve's Annual Financial Markets Conference, in Amelia Island.

The Bank of Canada Governor Stephen Poloz speaks in a panel discussion at the Milken Institute's Global Conference in Los Angeles at 12:30 pm ET.

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