"From the markets' point of view, a two-stage plan is a non-starter because we now know it is amateur hour on Capitol Hill
and we don't want to be painted in this corner again," said Christian Cooper, head of U.S. dollar derivatives trading in New York at Jefferies & Co.
"There is significant risk of a downgrade with a deal that ties further cuts to another vote only a few months down the road given the significant resistance to do the right thing now," Cooper said.
Against the euro, the dollar declined to $1.4384 in early trading, from $1.4360 late on July 22. It fell to 78.13 yen from 78.54. Futures on the Standard & Poor's 500 Index, the benchmark measure of U.S. equities, begin trading at 6 p.m. New York time today.