Investing.com - The dollar tumbled against a basket of the other major currencies on Tuesday as the euro surged after President Donald Trump’s top trade adviser accused Germany of currency exploitation.
Peter Navarro, the head of Trump’s new National Trade Council, said Germany is using a “grossly undervalued” euro to exploit the U.S. and its trading partners.
EUR/USD was up 0.86% at 1.0785 from around 1.0703 ahead of the remarks.
German Chancellor Angela Merkel rejected the remarks, saying that Germany cannot influence the value of the euro, and that the country has always called for the European Central Bank to have independent policy.
The dollar came under additional selling pressure after Trump, in a meeting with the chief executives of several top drugmakers, said drug companies had outsourced production because of currency devaluation by other countries.
The remarks indicated that the new administration is focusing on currencies as part of its approach in relation to trade.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.9% to 99.53, the lowest level since December 8.
Investors also remained on edge following Trump’s controversial travel ban, which sparked widespread protests in the U.S. and led to the firing of acting Attorney General Sally Yates on Monday, after she told justice department lawyers not to defend it.
The dollar fell to nine-week lows against the safe haven yen, with USD/JPY down 1.28% to 112.3.
The yen showed little reaction to the Bank of Japan’s decision overnight to keep monetary policy on hold.
The BoJ raised its growth forecast to 1.4% for the fiscal year ending March, compared with the previous projection of 1.0%.
Sterling was also higher against the dollar, with GBP/USD up 0.46% to 1.2540 but gains were checked ahead of the Bank of England’s upcoming meeting on Thursday.
The BoE is expected to revise up its outlook for inflation and growth, but uncertainty over Brexit is expected to cloud the outlook.