The dollar fell to its lowest level since March against the euro and the pound on Tuesday, after signs of a slowdown in the U.S. economy boosted bets on a U.S. interest rate cut.
The US currency fell to a two-week low against the yen after data showed a second straight monthly slowdown in manufacturing activity and an unexpected drop in construction spending, according to Reuters.
The Fed's continued high interest rate policy is under scrutiny as it continues to weigh on the U.S. economy, said James Knifton, a financial analyst.
Analysts are closely watching upcoming jobs data for signs of economic stress, he added.
Knifton expected that the dollar's performance would be disturbed in November, due to the coincidence of the Federal Reserve's possible interest rate cut meeting with the US elections.
The Fed’s monetary policy committee will announce its decision on June 12, when consumer price data is also due. Traders and analysts are bracing for any signs of a change in monetary policy at that meeting, but officials will update their economic forecasts and interest rate outlooks.
The dollar index, which measures the currency against the euro, pound, yen and three other major currencies, fell 0.05% to 103.99, its lowest level since April 9.
The euro rose 0.11% to $1.09155, its highest level since March 11.
European Central Bank policymakers are likely to cut interest rates at their meeting on Thursday, but a rise in inflation data last week may give officials pause to consider when to next ease monetary policy.
The pound rose 0.05% to $1.2814, its highest level since March 14.
However, the dollar rose 0.14% to 156.255 yen, after reaching 155.95 yesterday evening.
The New Zealand dollar rose to $0.6194 for the first time since March 8.
The Australian dollar was steady at $0.66895, near a two-week high.
