By Aaron Hankin

The U.S. dollar on Tuesday was weaker against most of its peers, with a popular measure of its value hitting its lowest level in a week.

The ICE U.S. Dollar Index , a measure of the buck's value against a weighted basket of six currencies, was lower by 0.3% at 97.492. The index hit a session low at 97.44, its lowest level since April 23.

What are analysts saying?

"The greenback retreated from its recent cycle highs as U.S. inflation data has been below expectations. Despite some of the negativity against the dollar, investors are content to continue buying U.S. dollars on pullbacks," wrote Dean Popplewell, vice president of market analysis at Oanda, in a note to clients.

Biggest movers

The Japanese yen rose 0.3% against the greenback after a bout of selling on the heels of weaker-than-expected data out of China.

"The focus is on China, the Chinese economic engine has sputtered and the risk sentiment is impacted by this. The Chinese Caixin manufacturing PMI fell to 50.2, missing the forecast of 51. However, the bright side is that it is still in the positive territory," said Naeem Aslam, senior market analyst at Think Markets U.K.

A reading above 50 represents economic expansion.

Elsewhere, the euro popped through $1.12 and was last changing hands at $1.1221 versus the dollar, compared with $1.1186 on Monday.

Data out of the eurozone showed a mild pickup in growth and a fall in the unemployment rate to 7.7% from 7.8%.

Also

Chart of the day

The British pound traded higher on Tuesday, breaking some closely watched momentum indicators and moving above the $1.30 mark for the first time in a week.

"GBP is strong against a range of currencies and is now pushing back above a couple of recent resistance levels that have capped GBPUSD. The pair are back above an old support-turned-resistance level around 1.2960, and they have also traded above the 200-day moving average around 1.2970," wrote Nick Cawley, markets analyst at Daily FX.

Sterling extended gains against the buck in afternoon trade, hitting $1.3040, up 0.8%.

Economic data

On the U.S. data front, the employment cost index rose 0.7%, in line with expectations, the Chicago PMI fell to 52.6 and U.S. consumer confidence rose to 129.2, above what economists polled by MarketWatch expected.

In Canada, government data showed the economy contracted by 0.1% in February from the previous month, slightly below market consensus.

The Canadian dollar erased early losses to trade at C1.3401, up 0.4% versus the greenback.