Investing.com - The dollar held onto gains against other major currencies on Wednesday, recovering from the previous session’s downbeat U.S. data, although U.S. political uncertainty was expected to limit the greenback’s rise.
EUR/USD slipped 0.19% to 1.0711, off a three-week high of 1.0737 hit overnight.
The greenback had weakened after the U.S. Commerce Department reported on Tuesday that housing starts fell in March, likely due to bad weather, while building permits rose.
A separate report showed that U.S. industrial production rose in line with economists’ forecasts in March, while manufacturing production unexpectedly fell.
Sentiment on the greenback also remained vulnerable as trade talks between the U.S. and Japan got underway this week, with markets awaiting indications of the direction U.S. trade policy could take under President Donald Trump, who campaigned on a protectionist platform.
Heightened tensions around North Korea, which has vowed to conduct more missile tests following Sunday's failed missile launch, also continued to weigh on the greenback.
U.S. Vice President Mike Pence said on Wednesday that Washington would work with its allies and China to put economic and diplomatic pressure on North Korea.
Markets were also jittery ahead of the first round of the French presidential election, scheduled on Sunday April 23. The race tightened after a surge in polls for far-left candidate Jean-Luc Melenchon, who wants a referendum on the country’s European Union membership.
Elsewhere, GBP/USD edged down 0.20% to 1.2816 after hitting a six-month peak of 1.2904 on Tuesday, when U.K. Prime Minister Theresa May on Tuesday called a snap election for June 8.
Analysts expect May to win a substantial majority in the elections, securing her position ahead of talks with the European Union about the terms for Brexit.
USD/JPY gained 0.43% to trade at 108.90, while USD/CHF eased up 0.11% to 0.9975.
The Australian and New Zealand dollars were weaker, with AUD/USD down 0.60% at 0.7515 and with NZD/USD declining 0.41% to 0.7013.
Meanwhile, USD/CAD rose 0.34% to trade at 1.3427.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.23% at 99.64, just off the previous session’s three-week low of 99.36.