By Deborah Levine and William L. Watts, MarketWatch NEW YORK (MarketWatch) — The U.S. dollar declined against the euro on Tuesday ahead of a key vote in the Greek parliament late in the session that will set the stage for Greece to either receive more bailout funding or head towards defaulting on its debt. Investors expect the former, so see less need to the relative safe-haven status of the greenback or U.S. Treasurys, which also boosted stocks and commodities. “If the Greek confidence vote this evening passes, the better tone for risk should continue short term,” said Adam Cole, global head of foreign exchange strategy at RBC Capital Markets. The euro EURUSD +0.56% climbed to $1.4382 from $1.4305 in late North American trading Monday. The dollar index DXY -0.34% , which measures the performance of the U.S. unit against a basket of six major currencies, fell to 74.692, compared to 75.043 late Monday. See real-time currency quotes and tools. Greek Prime Minister George Papandreou’s reshuffled government is expected to survive a confidence vote late Tuesday, which will increase the odds that lawmakers will push through unpopular spending cuts later this month in order to receive the next installment of international aid. The risk is if he doesn’t win parliament’s endorsement, it raises worries that Greece won’t take the steps necessary to get more loans and could default, sending financial markets into a spiral and spark a selloff in the bonds and assets of other debt-strapped European countries. “If on the off chance the Papandreou government falls, the ensuing chaos could easily send the [euro/dollar] pair toward the $1.4000 figure as the prospect of a Greek default will suddenly become very real,” said Boris Schlossberg, head of currency research at GFT, in emailed comments. Currency strategists at BNP Paribas said the outcome of the confidence vote in Greece, and the embattled government’s vote on the budget next week, must be determined “before we can see Greek concerns abate and risk make a full comeback.” Some attention will also be put on economic data. The euro lost some ground briefly as a measure of investor sentiment in Germany showed a sharper-than-expected decline this month. See more on ZEW index. Also Tuesday, U.S. existing-home sales data due out at 10 a.m. Eastern time may put further pressure on the greenback, according to BNP Paribas. “While the U.S. housing market remains the Achilles heel of the U.S. economy, negative housing numbers should continue to weigh on U.S. dollar,” the strategists said. The Federal Reserve also begins a two-day policy meeting. Officials are expected to maintain the current ultra-low benchmark interest rate range. Also, they say they will end its bond-buying program as planned at the end of the month, though continue purchases of smaller amounts as debt matures, to avoid an inadvertent tightening of fiscal conditions. Read more about Fed. U.K. Australian policy Meanwhile, the British pound GBPUSD +0.14% traded at $1.6210, down about 0.1% from Monday. Sterling came under pressure after Paul Fisher, the Bank of England’s executive director for markets and a member of the central bank’s Monetary Policy Committee, said further quantitative easing remains “very much on the table,” if the British economy weakens substantially. Against the Japanese yen, the dollar USDJPY -0.13% eased back to ¥80.12, down from ¥80.31 Monday. The Australian dollar weakened against the U.S. unit after minutes from the Reserve Bank of Australia’s latest policy meeting showed further tightening will be necessary, though recent data haven’t added any urgency to raise intererst rates. Read more on the RBA minutes. The Australian currency AUDUSD +0.26% traded at $1.0596, down from $1.0610 prior to the minutes’ release and off 0.15 on the day. Deborah Levine is a MarketWatch reporter, based in New York. William L. Watts in Frankfurt and Virginia Harrison in Sydney contributed to this report.

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