Investing.com -The dollar sagged to more than one-year lows against a basket of the other major currencies on Tuesday as investors awaited the outcome of this week’s Federal Reserve meeting and monitored political developments in Washington.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 93.8 by 06.04 a.m. ET (10.06 a.m. GMT), not far from Monday’s low of 93.65, its weakest since June 2016.
Investors remained focused on the investigation into alleged links between U.S. President Donald Trump’s administration and Russia in last year’s election.
On Monday, Jared Kushner, Trump’s son-in-law and a senior White House adviser, told Senate investigators he had met with Russian officials four times last year but said he did not collude with Moscow.
Investors fear the persistent political turmoil will derail the Trump administration’s pro-growth economic agenda of tax cuts and infrastructure spending, which helped propel the dollar to 14-year peaks after the November election.
Doubts over the Federal Reserve’s plans for a third rate hike this year have also fed into dollar weakness.
The Fed is to kick off its two-day meeting on Tuesday and is widely expected to hold policy steady, but officials could hint at its plans to start normalizing its balance sheet.
The dollar pushed higher against the yen, with USD/JPY rising 0.3% to 111.42. On Monday the pair hit 110.61, the lowest level since mid-June.
The euro was a touch higher against the dollar, with EUR/USD at 1.1655, close to Monday’s 23-month high of 1.1684.
Demand for the euro continued to be underpinned by expectations that the European Central Bank is moving closer to tapering its bond-buying program.
Sterling was little changed against the dollar, with GBP/USD at 1.3018.