Investing.com - The dollar held onto modest gains against other major currencies on Wednesday, just off a three-year low as the euro finally gave back some strength, although U.S. political concerns were expected to limit gains.
Market participants were focusing on the risk of a potential U.S. government shutdown on Saturday.
Fresh political tensions in Washington surfaced after comments by President Donald Trump on immigration dampened the prospects that a broad spending and immigration deal can be reached by the end of the week, raising the possibility of a government shutdown.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.12% at 90.34 by 05:15 a.m. ET (09:15 GMT), after hitting a fresh three-year trough of 89.98 overnight.
The dollar has been pressured lower by concerns the global economic recovery will outpace U.S. growth and prompt other major central banks, led by the European Central Bank to begin unwinding loose monetary policy at a faster pace than expected.
Expectations that the ECB could soon start to scale back its monetary stimulus program received a boost on Monday after ECB Governing Council member Ardo Hansson said bond purchases could end in one step in September if the economy and inflation develop as expected.
Earlier Wednesday, revised data showed that euro zone inflation eased in line with expectations in December.
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