Investing.com - The dollar was holding close to three-week highs against the yen on Tuesday but slipped lower against the euro after Federal Reserve Chair Janet Yellen struck a more dovish than expected tone on the economic outlook.
USD/JPY edged up 0.09% to 103.29, holding just below the three-week highs of 103.43 reached on Monday.
The dollar’s gains against the yen were held in check after Ms. Yellen said Monday that “considerable slack” still remained in the U.S. labor market and reiterated that the Fed’s commitment to economic stimulus will still be needed for some time.
The yen remained under pressure as expectations that China will implement fresh stimulus measures to shore up slowing growth dampened safe haven demand for the Japanese currency.
Data released on Tuesday showed that China’s official manufacturing purchasing managers’ index for March rose to 50.3 from 50.2 in February. However, a separate report showed that China’s HSBC manufacturing PMI fell to 48, the weakest level in a year-and-a-half, from a final reading of 48.5 in February.
EUR/USD was up 0.15% to 1.3791, moving away from Monday’s lows of 1.3720.
The euro initially fell against the dollar on Monday after data showed that the annual rate of euro zone inflation slowed to 0.5% in March, the lowest since November 2009. The weak data added to expectations that the European Central Bank will have to take further steps to stave off the threat of deflation in the region.
The pound was steady near two-week highs against the dollar, with GBP/USD trading at 1.6660, while USD/CHF was down 0.16% to 0.8829.
The Australian dollar dipped, with AUD/USD edging down 0.08% to 0.9256. The pair rose to four-month highs of 0.9302 earlier after the Reserve Bank of Australia left interest rates on hold at 2.5%. The Aussie came off highs after the central bank noted that the currency still remained high by historical standards.
NZD/USD remained supported at 0.8678, holding just below the two-and-a-half year peaks of 0.8696 struck on Friday, while USD/CAD was up 0.15% to 1.1066.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, edged down 0.06% to 80.21.
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