The greenback fell broadly against major currencies after the release of much weaker-than-expected U.S. consumer confidence, adding speculation that the Federal Reserve will cut the target lending rate by as much as a half-percentage point next month to revive economic growth.

The U.S. consumer confidence index fell to a five-year low of 64.5 (forecast was 74.0) in March, from an upwardly revised 76.4 in February. Interest-rate futures showed a 30% chance the Fed will trim the fed funds target by a half-percentage point at its April 30 meeting, compared with no chance a month ago.

ECB Vice President Lucas Papademos said recent moves in exchange rates had been excessive. However, the single currency rose from 1.5408 to 1.5660 due to dollar’s broad based weakness. The British pound also rallied from 1.9852 to 2.0068. The greenback fell versus the Japanese yen and Swiss franc from 101.04 to 99.63 and from 1.0223 to 1.0039 respectively,

Wednesday will see the release of Japan’s trade balance, German Ifo index, eurozone current account and industrial production, U.S. durable goods and new home sales. European Central Bank President Jean-Claude Trichet will deliver testimony to the European Parliament's economic and monetary affairs committee on Wednesday. He said inflation expectations is the ‘highest priority’ after the central bank left its main interest rate unchanged at a six-year high of 4% on March 6.