The dollar index slipped to 101.8 on Tuesday, weighed down by easing concerns over elevated energy prices and the need for additional monetary tightening. Oil prices fell to a one-month low amid signs of recovering crude exports from the Middle East, helping to temper inflation worries and dampen expectations for an imminent increase in the federal funds rate.
The Federal Reserve is widely expected to keep borrowing costs unchanged this month, while markets are pricing in a 25 basis point rate hike in December. The greenback weakened broadly, with its steepest losses against the euro. The common currency had dropped as much as 0.8% on Monday, pressured by worries over high debt levels and political gridlock in France, while the prospect of an upcoming snap election in Spain further added to the headwinds.
