The dollar was on the back foot on Tuesday, hovering near a nine-month low to the euro and giving back recent gains against the yen, as traders continued to gauge the risks of a U.S. recession and the path for Federal Reserve policy.
Europe’s single currency was buoyed on Monday by comments from European Central Bank officials pointing to aggressive policy tightening.
The U.S. dollar index – which measures the greenback against a basket of six peers, including the euro and yen – slipped 0.09% to 101.92, heading back towards the 7-1/2-month low of 101.51 reached on Wednesday.
The euro added 0.08% to $1.0879, taking it closer to Monday’s peak of $1.0927, the strongest since April.
“The U.S. is no longer the cleanest shirt in the global economic laundry,” said Ray Attrill, head of foreign-exchange strategy at National Australia Bank, who expects the dollar index to fall to 100 by end-March and the euro to rise to $1.10.
“That’s integral to our bearish U.S. dollar view, that the U.S. is not going to be the global growth leader.”