Investing.com – The U.S. dollar fell on Tuesday, nearing a one-week low after a report that President-elect Donald Trump’s tariffs could be less aggressive, while the euro rose ahead of key inflation data.
At 04:25 ET (0925 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.3% lower at 107.775, after falling overnight to its lowest level since Dec. 30.
The dollar remains stuck
The dollar has fallen since the Washington Post published a report Monday saying the new Trump administration is exploring plans to limit tariffs on sectors deemed critical to U.S. national or economic security.
President-elect Donald Trump denied the report in a post on his Truth Social platform, but the dollar is still struggling to make gains.
“The dollar’s failure to recover all of its intraday losses on Monday likely points to two factors: first, the market was heavily favoring the dollar after a nearly uninterrupted three-month rally; second, the view that there is no smoke without fire and that the contents of this Washington Post report sound reasonable,” ING analysts said in a note.
There’s a slew of U.S. economic data to digest Tuesday, including for December and November, ahead of Friday’s closely watched data release for further clarity on the health of the world’s largest economy.
“It is unlikely that investors will be willing to consider heavy dollar selling ahead of Trump’s inauguration on January 20 on speculation about softer tariffs – but we may see a bit more rebalancing of currency positioning and a bit more dollar consolidation in the interim,” ING added. .
Euro rises ahead of inflation data
In Europe, the index rose 0.4% to 1.0431, rising again after jumping to a one-week high on Monday.
On Tuesday, attention turns to the release of the latest eurozone inflation data – the latest regional price data ahead of the next European Central Bank meeting on January 30.
The December index is expected to rise 2.4% year-on-year in December, accelerating from 2.2% in November.
However, data published in Spain and Germany showed a faster-than-expected rise in inflation, while France surprised with a decline.
Investors are now expecting the ECB to cut interest rates by around 100 basis points in the first half of 2025, and any signs of further decline in inflation will give the ECB the opportunity to ease policy further, putting pressure on the single currency.
traded 0.4% higher at 1.2569 after rising sharply the previous day, despite data showing UK house prices unexpectedly fell last month for the first time since March.
Shares fell 0.2% in December after rising 1.2% in November and were 3.3% higher than last year, below expectations of 4.2%, according to mortgage lender Halifax.
Interest rates remained unchanged last month after consumer prices rose above target, and they are expected to cut rates cautiously this year.
Yuan remains weak
In Asia, shares rose 0.1% to 7.3325, with the Chinese currency continuing to underperform, hitting its lowest level in 17 years on Monday.
Although the currency recovered slightly, it remained fragile thanks to the new US. restrictions against Chinese companies add pressure on the currency.
fell slightly to 157.56 after earlier hitting its highest level in nearly six months.