Asian markets started cautiously Tuesday while the euro's recent rally was hobbled by profit-taking and below-par economic data, with focus turning to the Federal Reserve's latest gathering this week.

While not expected to result in any shift in interest rates, the Fed meeting will be pored over by traders hoping for some clues about future hikes and its timetable for winding down its bond holdings.

The meeting is a key part of a stand-out week for US-watchers. It ends Wednesday, the same day second-quarter economic data is released, while big-name firms are at the height of their reporting season.

Thrown into the mix is the ongoing drama surrounding Donald Trump's administration, with his son-in-law and top adviser Jared Kushner giving testimony Monday denying colluding with Russia to sway the November presidential election.

"The high level of trepidation continues to weigh on market sentiment as congressional hearing of White House advisors all but guarantees some headline risk and a possible escalation of the Russia-gate bluster," said Stephen Innes, head of Asia-Pacific trading at OANDA.

"Risk sentiment is indecisive due to the political commotion in Washington but with so much dollar risk to roll out including (the Fed meeting and growth data) amidst a busy week for US corporate earning, investors have been reluctant participants so far this week showing a minimal appetite for markets in general."

- Possible dollar bounce -

Tokyo stocks ended the morning session down 0.1 percent, while Hong Kong rose 0.1 percent, having risen for 10 of the previous 11 trading days.

Shanghai added 0.2 percent, Sydney rose 0.7 percent and Singapore gained 0.3 percent. But Seoul slipped 0.2 percent and Taipei was off 0.1 percent.

US traders provided a limp lead, with the Dow and S&P 500 in New York both ending in the red.

On currency markets the euro stepped back after hitting near two-year highs of $1.1684, with investors cashing in while disappointing factory activity figures also dampened sentiment in the unit.

The dollar has come under pressure from the single currency on concerns about the future of Trump's economic agenda, a string of weak US data -- which have raised questions about future rate hikes -- and expectations the European Central Bank is about to start tightening policy.

However, Greg McKenna, chief market strategist at AxiTrader, said in a note: "My sense is the dollar’s weakness has now more than fully priced disappointment with the economic data, outlook, and impact on the Fed’s tightening and balance sheet adjustment process.

"This suggests there is a reasonable chance we might see a reversal" in the US dollar.

- Key figures around 0230 GMT -

Tokyo - Nikkei 225: DOWN 0.1 percent at 19,950.11 (break)

Hong Kong - Hang Seng: UP 0.1 percent at 26,867.82

Shanghai - Composite: UP 0.2 percent at 3,257.50

Euro/dollar: DOWN at $1.1638 from $1.1641 at 2100 GMT

Pound/dollar: DOWN at $1.3018 from $1.3028

Dollar/yen: UP at 111.26 yen from 111.12  

Oil - West Texas Intermediate: UP 12 cents at $46.46 per barrel

Oil - Brent North Sea: UP 11 cents at $48.71

New York - DOW: DOWN 0.3 percent at 2121,513.17 (close)

London - FTSE 100: DOWN 1.0 percent at 7,377.73 (close)