Investing.com - The U.S. dollar was broadly higher against a currency basket on Tuesday, amid renewed expectations for higher interest rates, while the euro was on track for its biggest one day decline of 2017 so far as rising political risk weighed.
EUR/USD hit more than one-week lows of 1.0656 and was last at 1.0672, down 0.70% for the day.
Sentiment on the euro was hit by concerns over the possibility of a Brexit or Trump-style shock result in France’s upcoming presidential election.
Worries over elections in the Netherlands, Germany and possibly Italy, as well as the ongoing row over Greece's bailout added to concerns over political risk in the euro area.
Dovish remarks by European Central Bank President Mario Draghi, who on Monday downplayed calls for the bank to scale back its stimulus program, also kept the single currency on the defensive.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, climbed 0.75% to 100.59.
The dollar strengthened across the board after Philly Fed President Patrick Harker said on Monday he would support hiking rates in March.
Against the yen the dollar was higher, with USD/JPY adding 0.64% to 112.43, rebounding from overnight lows of 111.58, the weakest since November 29.
The traditional safe haven yen has risen almost 4% against the dollar since the start of the year amid a lack of clarity on U.S. President Donald Trump's economic policies.
Data on Tuesday showed that the U.S. trade deficit narrowed in December, to $44.3 billion, on the back of an increase in exports.
The report also showed that the U.S. trade deficit hit a four-year high in 2016, at $502.3 billion, up from $500.4 billion in 2015.
The data was likely to bolster Trump’s claims that the U.S. needs to take a tougher approach on trade.
Sterling was at two-week lows, with GBP/USD down 0.85% at 1.2361 as parliamentary debate on a law giving Prime Minister Theresa May the right to trigger Brexit continued for a second day.
Meanwhile, the Australian dollar was lower, with AUD/USD falling 0.54% to 0.7624.
The Reserve Bank of Australia held interest rates steady at its first policy meeting of 2017 on Tuesday and said a recent soft patch in growth was temporary and would not prevent a healthy pickup over time.