The greenback fell broadly against major currencies as U.S. home prices and consumer confidence tumbled, adding speculation that the Federal Reserve will keep reducing interest rates.

U.S. consumer confidence data came in much weaker-than-expected at 75.0 in February versus the forecast of 82.0 and the downwardly revised 87.3 in January. The U.S. house price index was -5.4%, also much lower than the expectation of –1.0%. Interest-rate future showed a 92% chance that the U.S. central bank will reduce the 3% target rate for overnight lending between banks by 50 basis points to 2.5% at their March 18 meeting and indicated 8% likelihood of a quarter-point cut.

U.S. Federal Reserve Vice Chairman Donald Kohn said the danger the U.S. economy will weaken further for a bigger worry than higher inflation and the central bank has tools and is ready to do what it needs to respond to 'difficult times'.

The single currency rallied to a fresh record high of 1.4987 versus the dollar due to the Munich-based Ifo institute said its business climate index rose to 104.1 in February, from 103.4 in January and the weak U.S. economic data. The British pound rose strongly from 1.9642 to 1.9875. The greenback weakened against the Japanese yen from 108.14 to 107.19.

New Zealand dollar rose to a record high of 0.8175 versus U.S. currency whilst Australian dollar rallied to 0.9340 against the greenback.

Wednesday will see the release of German import price index, Gfk index, U.K. GDP, U.S. durable goods and new home sales.