The U.S. dollar traded higher against the most major currencies despite the weaker-than-expected NAHB housing market index. The NAHB housing market index declined to 57 in January from 58 in December. December's figure was revised up from 57. Analysts had expected the index to remain at 58.

U.S. markets were closed for Martin Luther King holiday on Monday.

The euro traded lower against the U.S. dollar after the better-than-expected ZEW economic sentiment index from the Eurozone. Germany's ZEW economic sentiment index increased to 48.4 in January from 34.9 in December, exceeding expectations for a rise to 40.1.

Eurozone's ZEW economic sentiment index rose to 45.2 in January from 31.8 in December, beating expectations for a gain to 37.6.

The British pound traded higher against the U.S. dollar in the absence of any major economic reports from the U.K.

The Canadian dollar dropped against the U.S. dollar after the weaker-than-expected Canadian economic data. Canada's manufacturing shipments plunged 1.4% in November, missing expectations for a 0.5% decrease, after a 1.1% drop in October. October's figure was revised down from a 0.6% decline.

The New Zealand dollar declined against the U.S. dollar. In the overnight trading session, the kiwi fell against the greenback despite the solid NZIER business confidence index from New Zealand. The index rose to 23 in the fourth quarter from 19 in the third quarter.

Chinese economic data weighed on the kiwi. Chinese gross domestic product (GDP) rose by 7.3% in the fourth quarter, beating forecasts of a 7.2% gain, after a 7.3% increase in the third quarter.

China's industrial production climbed 7.9% in December, exceeding expectations for a 7.4% increase, after a 7.2% gain in November.

The Australian dollar traded lower against the U.S. dollar in the absence of any major economic reports from Australia. In the overnight trading session, the Aussie decreased against the greenback as Chinese economic data weighed on the Aussie.

The Japanese yen traded mixed against the U.S. dollar in the absence of any major economic reports from Japan.