The dollar faced pressure on Tuesday, and was trading at its lowest levels in several months against the euro and other major currencies at a time when investors expect US interest rates to decline next year and see this as a signal to sell the dollar as a hedge.
The movements were modest in early Asian trading, but the dollar index fell from its 200 moving average yesterday, Monday, as the rise in the Chinese yuan led to another round of significant decline for the US currency.
The dollar index, which measures the performance of the US currency against a basket of six major currencies, fell 1.9 percent last week in conjunction with a significant rise in US Treasury bond yields, and lost another 0.5 percent overnight to reach 103.44 points.
The euro touched its highest level in three months at $1.0952 yesterday, Monday, thanks to limited help from European Central Bank board member Pierre Wunsch, who opposed market expectations of a cut in interest rates in April.
The yuan recorded its highest level in three months against the dollar yesterday, Monday, thanks to the policies of the Chinese Central Bank. The Australian and New Zealand dollars also rose against the US currency.
In weak external trading on Tuesday morning, the yuan rose and maintained its gains at 7.1640 to the dollar.
The Australian dollar rose slightly to $0.6561, slightly below the highest level in three months that it recorded yesterday, Monday, at $0.6564.
The New Zealand dollar settled at $0.6040.
Even the yen rose to its highest level in seven weeks at 148.1 to the dollar overnight and settled at 148.3 dollars on Tuesday.
