Investing.com - The dollar edged higher against a basket of the other major currencies on Tuesday as the euro took a breather after having rallied to more than three year highs amid talk that the European Central Bank could scale back its monetary stimulus.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.19% to 90.29 by 03:19 AM ET (08:19 AM GMT). The index plumbed a three year low of 90.05 on Monday.
EUR/USD slid 0.13% to 1.2249, not far from Monday’s highs of 1.2296, which was the strongest level since December 2014.
The dollar has weakened broadly recently amid the view that the global economic recovery will outpace U.S. growth and prompt other major central banks, led by the ECB to begin unwinding loose monetary policy at a faster pace than has been expected.
Expectations that the ECB could soon start to scale back its monetary stimulus program received a boost on Monday after ECB Governing Council member Ardo Hansson said bond purchases could end in in one step in September if the economy and inflation develop as now expected.
The dollar edged higher against the yen, with USD/JPY rising 0.14% to 110.69, pulling away from the four-month low of 110.32 set on Monday.
Sterling was little changed against the dollar, with GBP/USD at 1.3785, holding below Monday’s peaks of 1.3819, the highest since Britain’s vote to exit the European Union in June 2016.
The UK was to release December inflation data later in the day, which was expected to show that a squeeze on the cost of living is easing.