Investing.com – The dollar moved off session lows as the euro reversed its earlier gains amid ongoing political uncertainty in Italy, while the pound resumed its downward trend adding to dollar strength.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.10% to 93.55.
EUR/USD fell 0.16% to $1.7772, retreating from a session high of $1.1717 as market participants appeared to use the rally as a selling opportunity amid political uncertainty in Italy.
“Political uncertainty in Italy, slowing growth in Europe, stronger growth in the US, and dollar friendly Treasury yields should continue to keep EUR/USD in sell-the-rally mode,” said Action Economics.
A retreat in GBP/USD to $1.3430 from $1.3491 also supported the rebound in the greenback.
The early-session rally in sterling arrived as Bank of England governor Mark Carney cited a more upbeat outlook on the UK economy while his colleague Gertjan Vlieghe predicted that the repo rate could be hiked by up to six times over the next three years.
USD/JPY remained under pressure trading at Y110.99, down 0.07%, despite dovish guidance from both Bank of Japan Governor Haruhiko Kuroda and BoJ Deputy Governor Masazumi Wakatabe Tuesday.
USD/CAD rose 0.19% to C$1.2812 as the rally in oil prices cooled, prompting traders to cut some of their Canadian dollar holdings, supporting a recovery in the pair from a low of C$1.2743.