The U.S. dollar fell to a new yearly low against the EUR and dropped against other major rivals Tuesday as investors continued to show a rising appetite for risk. Better economic data from Germany and Britain also supported investors' risk appetite at the margin. The U.S. dollar, seen as a safe-haven in uncertain times, usually tends to fall when hopes of a global recovery rise.
The greenback's weakness came against a backdrop marked by a push higher in equities and improving economic data abroad, as well as renewed questions about the role of the Dollar as the world's premier reserve currency. The greenback was universally sold on reignited concerns about the capacity of the U.S. dollar to retain its global reserve status. The USD even lost ground to another safe-haven, the Japanese yen, suggesting the selling was more than just a shift to risk. The Dollar was down at 92.30 yen, having shed nearly 0.8% on Tuesday.
Renewed concerns about the status of the U.S dollar as the world's reserve currency sparked by a United Nations agency report on Monday and news out of China expressing concern about printing money to fund Treasury purchases have also weighed on the Dollar. The USD was pushed lower by several news headlines with the UN report and the China news, analysts said. All these things are dollar negative. This is a reminder that the U.S. dollar is poised for some weakness in the months ahead.