The U.S. dollar weakened against other major currencies in the European session on Tuesday, as weak ISM services activity data for May boosted hopes for a pause in rate hikes at the Fed meeting next week.

Survey from the Institute for Supply Management showed that U.S. services PMI index fell to 50.3 in May from 51.9 last month, missing forecasts of 52.2.

Separate data showed that new orders for manufactured goods rose by slightly less than expected in April.

Markets are pricing in a 77.1% chance that the Fed will hold rates steady at its June 13-14 meeting.

U.S. treasury yields dropped, with the benchmark yield on the 10-year note touching 3.66 percent. Yields move inversely to bond prices.

The greenback fell to 4-day lows of 1.0732 against the euro, 1.2459 against the pound and 139.09 against the yen, from yesterday's closing quotes of 1.0712, 1.2436 and 139.58, respectively. The greenback is seen finding support around 1.09 against the euro, 1.27 against the pound and 134.00 against the yen.

The greenback dropped to a 1-week low of 0.9032 against the Swiss franc from yesterday's close of 0.9061. The greenback may face support around the 0.89 region, if it falls again.

The greenback depreciated to a 3-week low of 0.6685 against the aussie, 4-day low of 0.6100 against the kiwi and near a 4-week low of 1.3389 against the loonie, from yesterday's closing values of 0.6617, 0.6069 and 1.3445, respectively. The greenback is likely to challenge support around 0.68 against the aussie, 0.64 against the kiwi and 1.32 against the loonie.

Looking ahead, Canada building permits for April and Ivey PMI for May are slated for release in the New York session.

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