The dollar fell on Wednesday after two days of gains, pressured by the decline in US Treasury yields as investors have priced out a March rate hike by the Federal Reserve amid uncertainty about President Donald Trump's economic policies. Joe Manimbo, senior market analyst at Western Union Business Solutions, said the drop in yields reflected investor frustration about the Trump administration's lack of details on its stimulus agenda.
Concerns about the impact on the world economy of Trump's protectionism and immigration policy have also undermined the greenback, along with the new administration's hints that it would prefer a weaker dollar. Manimbo also said the perception that a US rate hike is off the table over the first quarter of the year has also weighed on the US currency and pushed Treasury yields lower.
The safe-haven yen, meanwhile, rose amid concerns around global political risks in Europe with the onslaught of elections this year in France, Germany, Netherlands, and possibly Italy. The euro recovered against the dollar on Wednesday from more than one-week lows, on short-covering after days of losses. But its fortunes over the last few days have been largely tied to developments in France's looming presidential elections.
"The French political noise has brought the euro down and that has given the dollar a reprieve," said Gavin Friend, a strategist with National Australia Bank in London. In late morning trading, the dollar index fell 0.2 percent to 100.10, as the greenback slid 0.6 percent to 111.94 yen. The euro was down 0.3 percent against the yen at 119.69 yen, but rose 0.2 percent versus the dollar to $1.0702.
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