Forexpros – The U.S. dollar turned broadly lower against its major counterparts Tuesday, as Fed easing speculation overshadowed broad concerns over the deepening sovereign debt crisis in the euro zone.

During U.S. afternoon trade, the greenback was down against the euro, with EUR/USD soaring 1.12% to hit 1.2718.

The U.S. central bank was to begin its two-day policy meeting later Tuesday, amid growing expectations that policymakers may announce fresh monetary stimulus measures after a recent string of weak economic data.

Earlier Tuesday, official data painted a mixed picture of the U.S. housing sector as the number of building permits issued in the U.S. rose more-than-expected in May, rising to 0.780 million, the highest level since September 2008, blowing past expectations for an increase to 0.728 million.

But U.S. housing starts fell to 0.708 million last month, compared to expectations for a decline to 0.720 million.

In the euro zone, the yield on Spanish 10-year bonds eased back from session highs but remained above the critical 7% threshold amid concerns that a EUR100 billion bailout agreed earlier this month may not be enough to secure the country’s troubled banking system.

Madrid saw short-term borrowing costs rise to euro-era highs at an auction of government bonds earlier Tuesday.

Elsewhere, a report showed that the ZEW index of economic sentiment in Germany tumbled in June, amid concerns over political instability in Greece and worries over sovereign debt contagion.

Meanwhile, investors remained hopeful that Greece’s New Democracy party would form a coalition government with the socialist Pasok party, which would allow Athens to resume negotiations with creditors on its international bailout deal.

The greenback was slightly lower against the pound, with GBP/USD moving up 0.52% to hit 1.5749.

Sterling remained under pressure after an unexpected decline in U.K. consumer price inflation in May added to expectations for more quantitative easing from the Bank of England, as until now inflation has been easing more slowly than the bank had hoped.

The U.K. Office for National Statistics said that consumer price inflation fell to 2.8% year-over-year from 3.0% in April, defying forecasts for an unchanged reading.

Elsewhere, the greenback edged lower against the yen, with USD/JPYdipping 0.08% to hit 79.04, but posted steep losses against the Swiss franc, with USD/CHF falling 0.79% to hit 0.9473.

The greenback was also weaker against its Canadian, Australian and New Zealand counterparts, with USD/CAD shedding 0.67% to hit 1.0172,AUD/USD rising 0.57% to hit 1.0183 and NZD/USD advancing 0.62% to hit 0.7969.

In Canada, government data showed that wholesale sales rose by 1.5% in April, beating expectations for a 1.0% increase, moving higher for the third successive month.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.99%, to trade at 81.43.

Leaders from the Group of 20 nations were continuing to hold a second day of talks in Los Cabos, Mexico.