The dollar languished near a multi-week low on Tuesday as fears of a broader systemic crisis following the collapse of a U.S. tech-focused lender left traders speculating that the Federal Reserve could pause its aggressive rate-hiking cycle.
Market jitters continued to set the tone for a second straight trading day in the wake of the sudden collapse of Silicon Valley Bank (SVB) and Signature Bank, although U.S. President Joe Biden on Monday vowed to take action to ensure the safety of the U.S. banking system.
Over the weekend, U.S. authorities launched emergency measures to shore up banking confidence.
The fallout sent traders scaling back their bets on how much further the Fed would continue raising interest rates, sparking a sharp rally in Fed funds futures and sending the U.S. dollar tumbling.
The greenback was nursing deep losses from the previous session in early Asia trade, and was last marginally higher against the Japanese yen at 133.42, having slid 1.4% on Monday.
Similarly, sterling edged 0.19% lower to $1.2159, though it remained near its one-month peak of $1.2200 hit in the previous session. The euro fell 0.09% to $1.0719, but was likewise not far from Monday’s one-month top of $1.07485.
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