Investing.com -The dollar slumped to fresh 13-month lows against a currency basket on Tuesday ahead of the outcome of the latest Federal Reserve meeting as political developments in Washington continued to weigh.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.33% to 93.59 by 09.30 a.m. ET (02.30 p.m. GMT), its weakest since June 2016.
The index has fallen around 2% so far this month and is down 8% for the year to date.
The Fed’s two-day meeting was kicking off later in the day, with no changes to monetary policy expected.
Investors were hoping that the bank’s rate statement will reveal more about the Fed’s policy plans for the second half of the year, with markets paying close attention to details of when and how the Fed will start reducing its $4.5 trillion balance sheet.
Doubts over the Feds plans for a third rate hike this year have fed into recent dollar weakness.
Investors also 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.
The euro rose to its highest level against the dollar since August 2015, with EUR/USD rising 0.45% to 1.1692.
Demand for the euro continued to be underpinned by expectations that the European Central Bank is moving closer to tapering its bond-buying program.
The euro also surged higher against the yen, with EUR/JPY advancing 0.73% to 130.3.
The dollar was 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 safe haven yen weakened as robust earnings reports in the U.S. sharpened risk appetite.