The market showed a little more appetite for risk-taking, with gains in currencies that rise in times of improving sentiment such as sterling, the New Zealand dollar, and Norwegian crown.

Pfizer announced that the final results from the late-stage trial of its COVID-19 vaccine showed it was 95% effective, giving relief to a pandemic-weary market. That followed news that Moderna Inc released preliminary data for its vaccine, showing 94.5% effectiveness.

That said, the number of reported global daily deaths from the coronavirus stood at 10,816 on Tuesday, according to a Reuters tally, the highest single-day death count. The United States, the worst-affected country worldwide, has reported about 11.38 million infections and 248,574 deaths since the pandemic started.

"A spike in COVID cases is generally good for the dollar and other safe-haven currencies like the yen and Swiss franc, but the positive vaccine news roughly counters that," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.

The dollar as a safe haven is expected to weaken overall as global economies improve once the vaccine gets widely distributed.

That said, TD Securities believes the dollar has further room to rally in the short term given that the market is overestimating the "timing and scalability" of vaccine distribution.

In the latest research note, TD Securities senior FX strategist Mazen Issa recommended taking a defensive posture in the coming weeks, noting that "broad market optimism has overshot reality and that the good news related to the vaccine race is already in the price."

In afternoon trading, the dollar index slipped 0.1% to 92.312 <=USD>, after dropping to 92.207, its lowest since Nov. 9.

Bitcoin , sometimes regarded as a safe haven, or at least a hedge against inflation, rose to more than $18,000 for the first time in nearly three years. It last stood around $17,590, down 0.4%.

The euro was little changed on the day at $1.1864. On Wednesday, Poland and Hungary blocked the European Union's 1.8 trillion-euro ($2.14 trillion) financial package to revive an economy depressed by the COVID-19 pandemic.

Sterling, meanwhile, rose 0.2% versus the dollar to $1.3279 in the wake of a report from the Sun newspaper that Prime Minister Boris Johnson was told by British negotiators to expect a Brussels trade deal early next week, with "a possible landing zone" as soon as next Tuesday.

The dollar though fell 0.3% against the yen to 103.865 , with the Japanese currency recouping much of the losses it suffered last week after Pfizer announced it had developed a working COVID-19 vaccine.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu Nomiyama)

By Gertrude Chavez-Dreyfuss