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Against a basket of its rivals, the dollar fell 0.3% to 101.79,
its lowest level since April 26.
The euro, which was the stand-out gainer on Monday after
European Central Bank President Christine Lagarde indicated
negative interest rates, a euro zone feature for eight years,
will most likely be gone by the end of summer, extended gains.
The single currency was up 0.4% at $1.0729 in early London
trading as traders cut back some of their short bets after
Lagarde said interest rates were likely to be in positive
territory by the end of the third quarter.
"Many observers will continue to consider the ECB as being too
hesitant, but the fact that a lift-off is now very likely to
happen in July and that the ECB seems willing to hike rates
further after that is positive for the euro," Commerzbank
strategists said in a note.
The euro fell to a January 2017 low at $1.0349 earlier this
month but rebounded by 3.6% since that low in seven trading
sessions.
The risk-sensitive Aussie dollar dipped 0.41% to $0.70815, while
New Zealand's kiwi was 0.46% weaker at $0.6438, a day before the
Reserve Bank of New Zealand is widely expected to raise the key
rate by half a point.
Stock markets slid with U.S. stock futures down more than 2%.
Trading was volatile with an index of currency market volatility
holding firm at 9.6%, not far from a two-year high above 10.5%
hit earlier this month.
Graphic: euro positions -
https://fingfx.thomsonreuters.com/
gfx/mkt/jnpwezamkpw/euro%20positions.JPG
(Reporting by Saikat Chatterjee; Editing by Emelia
Sithole-Matarise)
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