Investing.com - The dollar slid lower against the euro and the yen on Tuesday as continued weakness in oil prices and caution ahead of the outcome of the Federal Reserve meeting on Wednesday bolstered demand for safe haven assets.
USD/JPY hit overnight lows of 117.66 and was last at 118.04, off 0.22% for the day.
Market sentiment was hit as fresh falls in oil prices, which slid back below $30 per barrel, and a late selloff in Chinese stock markets overnight added to fears over the outlook for global economic growth.
The low-yielding euro rose to highs of 1.0875 and was last at 1.0850.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, touched lows of 99.19 and was last at 99.37.
The U.S. central bank is expected to keep interest rate on hold at the conclusion of its two-day policy meeting on Wednesday after raising interest rates for the first time in almost a decade in December.
Investors were looking to the Fed policy statement for any indication that the bank is considering slowing the path of interest rate increases this year after recent global financial market turmoil.
Market participants were also cautious ahead of the conclusion of the Bank of Japan’s meeting on Friday.
Most analysts are expecting no changes to monetary policy, but recent weakness in economic reports, as well as comments by central bank officials have fueled expectations for more easing this year.
The commodity linked currencies also remained on the back foot. AUD/USD touched overnight lows of 0.6919 before pulling back to 0.6963.
NZD/USD edged down to 0.6449 ahead of the Reserve Bank of New Zealand’s rate review on Thursday. The RBNZ is expected to keep rates on hold, but to indicate that further rate cuts may be necessary.
The Canadian dollar was little changed against its U.S. counterpart, with USD/CAD at 1.4283.