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The single currency slipped 0.6 percent against the greenback to
$1.1750, retracing most of its overnight gains when it posted
its biggest single day rise so far this month.
"Our bias in these thin markets is to sell the euro on rallies
against the dollar as we think underlying positioning is still
quite stretched," said Adam Cole, chief currency strategist at
RBC Capital Markets in London.
Friday's speech by European Central Bank President Mario Draghi
is among the set-piece events at the Jackson Hole symposium,
where remarks by his Federal Reserve counterpart Janet Yellen on
the same day will be the main focus.
With speculative bullish bets on the euro still near its biggest
in five years, according to latest positioning data, some
investors think the euro's strength may likely fade given the
central bank's recent cautious stance about the currency.
Since hitting a 2-1/2 year high near $1.1910 in early August,
the common currency has lost some steam, as investors took on
board the cautious tone struck by ECB policymakers revealed in
the minutes of their July meeting.
Draghi will refrain from delivering a new policy message, two
sources familiar with the situation told Reuters last week,
tempering any expectations for the ECB to start charting the
course out of its quantitative easing (QE) stimulus programme.
"The euro has become slightly vulnerable after the recent rise
and unless Draghi comes out and says anything significant, we
expect the currency to remain under pressure," said Piotr Matys,
an FX strategist at Rabobank in London.
The euro's losses were also exacerbated by a broad bounce in the
dollar against most of its rivals in mid-morning trades.
It hopped 0.4 percent <.DXY> higher against a trade-weighted
basket of its currencies on Tuesday. The sterling fell to a
six-week low against the dollar <GBP=D3>.
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