Monetary easing by the Federal Reserve knocked demand for the U.S. currency. The greenback fell to a three-month low against the euro.
Further, the US dollar dropped to its weakest against the Japanese yen since early January. The dollar dropped 0.4% to as low as 106.78, having only fallen below 107 yen per dollar in the January flash crash and then last back in April 2018.
The yen has also benefited from investor nerves over tensions between the United States and Iran. Tehran said on Tuesday that U.S. sanctions permanently closed the path to diplomacy between the two countries.
Selling in the dollar has accelerated since the U.S. Federal Reserve signaled last week it would cut interest rates before year-end. Worries about an economic slowdown and the fallout from tariff wars between the United States and China mount.
U.S. 10-year Treasury yields again fell below 2% in earlier trading, reducing the interest rate advantage the dollar has enjoyed over rivals in recent years.
Fed Chairman Jerome Powell was due to speak later on Tuesday.
Investors are waiting to see whether U.S. President Donald Trump and Chinese President Xi Jinping will at least call a truce in their trade war when they meet at a summit of the G20 major economies in the Japanese city of Osaka late this week.
Forex – Monetary easing by the FED stroke dollar
Investors are waiting anxiously to see if anything comes of Sino-U.S. trade talks later this week. Sentiment was not helped by reports U.S. President Donald Trump would be content with “any outcome”.
The dollar index fell to a three-month low of 95.843, having lost 1.7% during the latest five sessions, and was last down 0.1% at 95.909.
The yen also rallied against the euro, adding 0.4% to 121.82 yen, while versus the British pound it was 0.2% ahead at 136.45 yen.
The euro hit a three-month high of $1.1412, having gained 2.0% from a two-week low of $1.1181 touched a week ago. It last stood at $1.1382, down 0.1% on the day. The euro was 0.3% firmer against the Swiss franc at 1.1108 francs, off almost 2-year lows of 1.1057 francs touched last week.
Sterling benefited from the broad dollar weakness, rising to $1.2754, up 0.1% on the day. However the pound is likely to remain under pressure because of Brexit concerns, with euroskeptic Boris Johnson the frontrunner to become the next leader and prime minister.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money