The U.S. dollar held most of its gains on Tuesday after hopes grew that a new tariff deal between the United States and China could help ease trade tensions between the two countries.
The deal, announced Monday, led to a rally in global stock and currency markets.
The dollar traded near a one-month high against a group of major currencies and was last at 101.56. It remains below the level it was at before President Donald Trump announced new tariffs on April 2, which had caused foreign investors to pull back from U.S. assets.
Against the Japanese yen, the dollar fell 0.26% to 148.07 yen after a strong gain on Monday. The euro rose 0.16% to $1.1105, recovering some ground after dropping sharply the day before. The dollar also slipped 0.45% against the Swiss franc to 0.8415.
China’s yuan reached a six-month high at 7.1855 per dollar, boosting other regional currencies. The Australian dollar climbed 0.67% to $0.64145, and the New Zealand dollar rose 0.68% to $0.5897. Both currencies are often used as substitutes for trading the yuan.
The Swedish crown also gained strength. The euro dropped 0.54% to 10.8226 crowns, while the dollar declined 0.7% to 9.7422 crowns.
The improved U.S.-China trade outlook also led traders to reduce expectations for interest rate cuts by the Federal Reserve. Markets are now pricing in nearly 56 basis points in rate cuts by December.
Investors are also watching for U.S. inflation data due later on Tuesday, which could influence the Fed’s next move. Forecasts suggest both the core and overall inflation rates likely rose in April.
The British pound rose 0.24% to $1.32085, recovering some ground after losses the day before.
Bitcoin last traded at $103,536 after reaching its highest level since January 31 in the previous session.
