The U.S. dollar continued to decline against most major currencies on Tuesday as the Federal Reserve kicked off its two-day policy meeting.

Investors also watch closely any clues about how the central bank plans to unwind its massive 4.5 trillion U.S. dollars balance sheet.

On the economic front, the Producer Price Index for final demand was unchanged in May, seasonally adjusted, the U.S. Labor Department reported Tuesday.

On an unadjusted basis, the final demand index increased 2.4 percent for the 12 months ended in May.

"Wholesale prices moderated a bit in May, but the rising trend in core prices has not yet turned. In the meantime, falling consumer inflation - in the US and globally - is not likely to be boosted by the PPI unless it picks up considerably further," said Chris Low, chief economist at FTN Financial, in a note.

The dollar index, which measures the greenback against six major peers, was down 0.12 percent at 97.025 in late trading.

In late New York trading, the euro increased to 1.1205 dollars from 1.1200 dollars in the previous session, and the British pound increased to 1.2746 dollars from 1.2643 U.S. dollars in the previous session. The Australian dollar increased to 0.7539 dollar from 0.7532 dollar.

The dollar bought 109.97 Japanese yen, higher than 109.83 yen of the previous session. The U.S. dollar lost to 0.9686 Swiss franc from 0.9689 Swiss franc, and it was down to 1.3235 Canadian dollars from 1.3336 Canadian dollars.