On Tuesday, the US dollar fell against a basket of other major currencies amid the strengthening of the euro after the trade adviser Peter Navarro, from the presidential administration of Trump, accused Germany of deliberately lowering the European currency.
Peter Navarro, head of the State Trade Council, said that Germany is using an undervalued euro to gain an advantage over the United States and its trading partners.
These statements showed that the new US administration sees the currency as a tool in building trade arrangements.
EUR/USD rose 0.86% to 1.0785 from the previous value at 1.0703.
German Chancellor Angela Merkel has rejected Navarro’s claims, saying that Germany can not affect the euro as it has always supported the European Central Bank’s independent policy.
The US Dollar Index, which shows the value of the dollar against a trade-weighted basket of six major currencies, was at the beginning of the trading session down 0.9% to 99.53 - the lowest value since December 8.
Investors will also continue to monitor the events related to the disputed decree of Donald Trump on immigration. This decree led to mass protests in the United States and the dismissal of the Acting Attorney, General Sally Yates, who ordered the Ministry of Justice lawyers not to implement the decree.
The dollar fell to a 9-month low against the yen: USD/JPY pair fell 1.28% to 112.3.
It was a reaction to yesterday's Bank of Japan decision not to change the monetary policy.
The Bank of Japan raised its forecast for economic growth to 1.4% for the fiscal year, which ends in late March. The previous forecast was 1.0%.
The pound also rose against the dollar: GBP/USD pair rose 0.46% to 1.2540 before the Bank of England meeting on Thursday.
It is expected that the Bank of England will revise its forecasts for inflation and GDP, but uncertainty related to the Brexit method makes it impossible to assess the long-term predictions.