NEW YORK, May 3 Reuters The U.S. dollar fell against a basket of currencies on Tuesday, as investors evaluated how much of the Federal Reserve39;s expected move to hike rates this week and beyond was already priced in.

The dollar index hit a 20year high last week on expectations the U.S. central bank will be more aggressive than peers in tightening policy, with inflation running at its fastest pace in 40 years.

But investors are also questioning whether most of the Fed39;s hawkishness is already factored in and the dollar39;s bull run may be due for a pause.

I think that so much good news for the U.S. is priced in that there could be a buy the rumor sell the fact, said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

The Fed is expected to raise interest rates by 50 basis points and announce plans to reduce its 9 trillion balance sheet when it concludes its twoday meeting on Wednesday.

Fed funds futures traders expect the Feds benchmark rate to rise to 2.81 by yearend, from 0.33 now.

Comments by Fed Chairman Jerome Powell at the conclusion of the meeting will be scrutinized for any new indications about whether the central bank will continue to hike rates to battle rising price pressures even if the economy weakens.

The dollar index was last at 103.17, down 0.37 on the day, after reaching 103.93 on Thursday, the highest since Dec. 2002.

The Aussie dollar was the best performer on the day after the Reserve Bank of Australia raised…