Today the euro gained ground with the dollar for the first time in a month as weak U.S. economic data fueled rumors that the Federal Reserve might scale back interest rate increases, sending the currency spiraling.
The EURUSD increased to its highest level since September 20 of $1.0048 and was last up 0.5% at $1.0019.
GBPUSD increased to $1.1563, its highest level since September 14, adding to the previous day's 1.6% gain as markets rejoiced at Rishi Sunak's appointment as prime minister of Britain and the dollar also declined against the Japanese yen.
USDJPY dropped to 146.715, falling 0.83%.
The dollar was down 0.595% at 110.28 against a basket of six peer currencies at 10:35 a.m. EDT (1435 GMT).
The benchmark 10-year U.S. Treasury yield, which had reached a multi-year high of 4.338% last week, had been declining since then and was last down four basis points at 4.069% as the dollar softened.
Fed officials have begun sounding out their desire to slow the pace of increases soon, according to a Wall Street Journal report on Friday that caused markets to reprice.
"Broad dollar weakness and further but milder declines in U.S. Treasury yields than yesterday appear to reflect wishful thinking toward a Fed pivot next week," said Derek Holt, head of capital markets at Scotia Economics.
"Don't hold your breath," he said.
The rapid rate of Fed tightening this year, intended to curb inflation that has remained persistently high, has given the dollar a boost.
Data released on Tuesday revealed that the U.S. fell in August as rising mortgage rates hampered demand, which supported the idea that the Fed could start to change course in December.
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