Investing.com - The dollar fell against its rivals Tuesday as risk-off sentiment boosted the yen, while a rise in sterling also weighed amid reports the EU may offer UK Prime Minister Theresa May a UK-wide customs union to clinch a Brexit deal.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.15% to 95.61.
Sterling gave up some of its gains against the greenback as analysts downplayed the prospect of the UK and EU agreeing a Brexit deal, even as reports suggested the EU may offer May a workaround over the Irish border issue.
GBP/USD rose 0.23% to $1.2995, but eased from a session high of $1.3044.
The offer would have to be negotiated beyond the withdrawal agreement as a separate treaty, postponing the Irish border issue, MUFG said.
"We are skeptical there is enough to unlock the problem," MUFG added.
This news comes at a time when May's grip on the UK ruling party appears to be waning as rumors swirled the prime minister could face a vote of no confidence as early as Wednesday when she is slated to address members of her party.
EUR/USD rose 0.12% as gains were limited by fears over a further rift between in the EU and Italy over the country's spending plans. The European Commission confirmed Tuesday it had rejected Italy's fiscal plan and called on the country to make revisions.
USD/CAD, meanwhile, fell 0.05% to C$1.13095 as losses in the loonie on falling oil prices were limited as investors eyed a widely-expected interest rate hike from the Bank of Canada due Wednesday.
The yen, meanwhile, was buoyed by a flight to safety as global markets sank on rising geopolitical uncertainty and concerns about global growth.
USD/JPY fell 0.51% to Y112.24.