The dollar dropped against a basket of other currencies for the second day on Tuesday as rising stocks reflected improving risk appetite, and as investors rebalanced portfolios for month-end.
Stock investors were cheered by better than expected corporate earnings and economic optimism after several countries and US states laid out plans to reopen businesses that were shut to stem the spread of the novel coronavirus.
Month-end rebalancing is also negative for the greenback with the US dollar likely to be sold against the euro, sterling, the Japanese yen and the Australian dollar, according to Mark McCormick, global head of FX strategy at TD Securities in Toronto.
These flows, in combination with a number of central bank meetings this week, make it difficult to read too much into market moves, he said.
“We wouldn't draw too many conclusions about the state of the currency market over the next few sessions given the mingling of policy and technical drivers," McCormick said.
The dollar index fell 0.42% to 99.64. It has risen from 99.00 at the end of March.
The Swedish crown jumped against the dollar and euro on Tuesday after the central bank held interest rates steady and maintained stimulus measures designed to support an economy battered by the coronavirus pandemic.
The greenback fell 0.92% to 9.911 crowns, after earlier getting as low as 9.853, the lowest since March 30.