The dollar was trading at two week lows against a currency basket on Wednesday as concerns over a U.S. – China trade spat eased and investors awaited U.S. inflation data and Federal Reserve minutes later in the day.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.15% to 89.20 by 06:28 AM ET (10:28 AM GMT).
Chinese President Xi Jinping and U.S. President Donald Trump both made conciliatory remarks on trade on Tuesday, which investors hope could pave the way for negotiations to avert a full blown trade war between the world’s top two economies.
But investors remained cautious following a report saying that early talks had already broken down.
Geopolitical tensions also gave investors some pause amid concerns over the prospect of a U.S. military strike in Syria
The U.S. and its Western allies are discussing a possible military strike on Syria in response to an alleged chemical attack over the weekend. Russia has urged the U.S. to refrain from taking military action, amid rising tensions between the two powers.
The dollar was lower against the yen, with USD/JPY down 0.24% to 106.93. The safe haven yen is often sought out by investors in time of market turmoil and political tensions.
Investors were looking ahead to U.S. inflation data for March and Fed meeting minutes later in the trading day that could help determine the direction of the dollar.
The euro was at two week highs, with EUR/USD up 0.18% to 1.2376.
The single currency remained supported after European Central Bank policymaker Ewald Nowotny said Tuesday that it was time to “normalize” its monetary policy.
Sterling pared back early gains against the dollar, with GBP/USD last at 1.4199.
The pound came off the best levels of the day after data showing an unexpected fall in UK manufacturing output in February.
The report will be scrutinized by the Bank of England, which has been widely expected to raise interest rates next month.