Fundamental analysis.
The euro traded at $1.4089, up from $1.3883 Monday. The dollar index, a measure of the greenback against a basket of major currencies, fell to 79.751, down from 80.961 in North American trading Monday afternoon.
The euro traded at $1.4089, up from $1.3883 Monday.
The U.S. dollar declined Tuesday, reversing a steep increase over the past few trading sessions, as investors questioned the long-term staying power of the greenback's recent resurgence.
The dollar fell as a pop in oil prices and stability in U.S. stock markets boosted risk appetite and sent investors into currencies that pay higher yields than the greenback.
The euro recouped some earlier gains after data showed a steeper-than-expected drop in German industrial output.
The dollar index, a measure of the greenback against a basket of major currencies, fell to 79.751, down from 80.961 in North American trading Monday afternoon.
The euro traded at $1.4089, up from $1.3883 Monday.
The dollar registered strong gains last week, jumping after U.S. non-farm payrolls showed a smaller-than-expected loss of jobs during May. U.S. Treasury yields jumped, particularly at the short end, on increasing bets that the Federal Reserve could begin to raise its official interest rate from near zero by the end of the year.
Dollar bears argue that the greenback's recent jump was largely a rebound from technically oversold levels and that fundamentals will favor a return to weakness in the U.S. currency in the near term.
The block of macroeconomic statistics, collected by FBS analysts:
1. Germany - CPI. There were no revisions to headline inflation in May. The final data still have the CPI declining 0.1 percent on the month to show no change on the year, down from an annual rate of 0.7 percent in April.
2. Great Britain - Industrial Production. For once, the industrial sector exceeded expectations in April when output rose 0.3 percent on the month. Moreover, the originally reported 0.6 percent fall in March was halved.
Even so, the increase still left a 3.2 percent drop in production over the latest 3-month period while in the year to April alone, activity was down 12.3 percent.
3. Great Britain - Merchandise Trade. The merchandise trade gap widened out by a larger than expected Stg0.5B to Stg7.0B in April. The deterioration reflected a 2.6 percent monthly rise in imports that more than offset a 0.6 percent increase in exports. The underlying trade deficit performed in much the same fashion, posting an extra Stg0.7B of red ink to reach Stg6.6B as import growth outstripped exports.
4. United States - International Trade. The U.S. international trade gap in March widened to $27.6 billion from $26.1 billion deficit the month before. But the widening was not due to a rise in imports but due to exports dropping a sharp 2.4 percent. Meanwhile, imports slipped 1.0 percent. Oil imports did rise but were offset by other imports falling. The March report paints a picture of contracting demand worldwide. Looking ahead, we may say a widening in the April gap due to higher oil prices boosting overall imports. But there is a good chance that we'll see a further deterioration in both exports and nonoil imports.
5. United States - Treasury Budget. The U.S. Treasury monthly budget report posted a record $20.9 billion deficit in April, a month that since 1983 (not long after the end of the 1982 recession) has seen nothing but budget surpluses.