The U.S. dollar rose Tuesday in cautious trading as the Federal Open Market Committee met - but didn't act - and the European monetary crisis eased.

Fears that German authorities are trying to torpedo progress toward European monetary union are not likely to be sustained, analysts said."The dollar is being supported by the notion the FOMC isn't going to anything," Anthony Conroy, head equity trader at Bankers Trust Global Asset Management in New York, said ahead of the Fed announcement that interest rates were unchanged.

A stronger currency "has certainly improved the sentiment in U.S. stocks," he said.

A rising dollar encourages foreign investors to buy dollar-denominated securities.

Traders also are anticipating this week's auctions of two- and five- year Treasury notes.

The Bank of Japan bought a lot of dollars in the past few days and is expected to put that money into U.S. Treasury securities, which should support prices at the auction, Mr. Conroy said.

The Conference Board said Tuesday that its U.S. consumer-confidence index fell to 97.4 in September from a revised 102.4 in August.

August was originally reported at 101.0. The July index was 101.4.

"Despite this latest dip, the current level of consumer confidence has been historically associated with healthy economic activity," said Fabian Linden, executive director of the Conference Board's Consumer Research Center.

''Confidence levels over the last three months parallel the fairly strong figures registered during the second quarter. The latest index reading reflects a modest U.S. unemployment rate and low inflation - circumstances that continue to be reassuring for the economy in the months ahead," he said.

Buying plans were mixed in the September report, with fewer consumers planning to buy homes and major appliances.

The dollar likely will trade choppily in thin trading as Japanese participants prepare to close their books for Saturday's end to their fiscal first half, dealers said. Minor position adjustment is expected to dominate, so price movements could be volatile when minor orders come through, dealers said. Selling interest from Japanese exporters, among others, was seen above 101.00 yen, while buying interest was seen near 99.50 yen.