Investing.com - The U.S. dollar weakened against a basket of the other major currencies on Tuesday, falling to fresh three-year lows amid concerns over the U.S. stance on global trade.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.29% to 89.89 by 11:00 AM ET (16:00 GMT), a level not seen December 2014.
A decision by U.S. President Donald Trump to impose import tariffs on washing machines and solar panels reignited concerns over his administrations protectionist stance and its possible impact on global trade.
The euro moved higher against the dollar, with EUR/USD climbing 0.30% to 1.2296, moving back towards last Wednesday’s three-year peaks of 1.2322.
Demand for the single currency continued to be underpinned ahead of the European Central Bank’s meeting on Thursday, which could provide insight into future shifts in monetary policy.
The dollar fell to the day’s lows against the yen, reversing earlier gains that came after the head of the Bank of Japan said it remained fully committed to monetary easing and was not about to scale back stimulus.
USD/JPY fell 0.51% at 110.33, not far off its four-month low of 110.18 set last Wednesday.
The yen had weakened earlier in the session after BoJ Governor Haruhiko Kuroda said there is still some distance to reach the banks 2% inflation target and that the bank has not yet reached the stage of thinking about how to handle an exit from its ultra-loose monetary policy.
The BoJ kept policy on hold on Tuesday, with interest rates at minus 0.1% and a cap on ten-year bond yields at about zero.
Kuroda’s remarks dampened speculation that the BoJ will soon follow the ECB and the Federal Reserve towards an exit from monetary easing.
The yen had strengthened after the BoJ adjusted its bond purchasing program earlier in January, purchasing fewer long-term bonds.
Sterling also gained ground, with GBP/USD advancing 0.23% to trade at 1.4018, which was the strongest level since Britain’s vote to exit the European Union in June 2016.
The pound was boosted by hopes that Britain will reach a favorable Brexit deal.
The dollar was also lower against the traditional safe haven Swiss franc, with USD/CHF down 0.46% to 0.9575.