NEW YORK: The dollar edged up against the euro on Tuesday as Germany’s parliament approved plans for a massive spending surge on Tuesday and as the Federal Reserve kicked off its March policy meeting that could offer clues to the path of US interest rates.
The euro was 0.2% lower at $1.0915, after hitting $1.0954 earlier in the session, its highest since October 10.
“(It’s) a classic ‘buy the rumour, sell the fact’ sort of reaction really, which isn’t too surprising,” said Michael Brown, senior research strategist at Pepperstone.
The German parliament’s approval of plans for a massive spending surge throws off decades of fiscal conservatism in hopes of reviving economic growth and scaling up military spending for a new era of European collective defence.
The euro rose earlier in the session after data showed German investor morale improved more than expected in March.
Broadly, currency market moves were largely muted as potential catalysts, including the German vote, developments on a possible Russia-Ukraine peace deal and policy announcements from major central banks in coming days, kept traders cautious.
The greenback hit a two-week high against the yen as investors await the outcome of Wednesday’s policy meeting from the Bank of Japan. The dollar was last up 0.3% at 149.65 yen.
BOJ policymakers are expected to discuss just how much of a risk the escalating US trade war poses to Japan’s economy.
The market will also be watching developments on a possible Russia-Ukraine peace deal, which would be positive for the single currency. The Kremlin said on Tuesday that President Vladimir Putin and President Donald Trump would hold a phone call between 1300 and 1500 GMT.
Elsewhere, the Australian dollar slipped 0.5% to $0.6352 after rising to its highest in about a month on Monday.
Bitcoin, the world’s largest cryptocurrency by market cap, was down 2.5% at $81,878.