The U.S. dollar fell sharply on Tuesday to its lowest level in nearly four months, as measured by an index of major currencies, with fears of a global economic slowdown pushing investors into safe-haven currencies like the Japanese yen and Swiss franc.
Risk appetite has waned as a selloff in major stock markets worldwide, along with a renewed tumble in crude oil prices, and worries about European banks shook confidence in the greenback.
The U.S. dollar index, which measures the greenback against a basket of world currencies, fell to 95.663, its lowest since Oct. 22 on Tuesday.
Given the dismal performance of oil and equity markets, and the market's lack of faith in the Federal Reserve's forecast for four interest rate rises this year, investors are unsure of how to value the dollar, said John Doyle, director of markets at Tempus in Washington
"That's been the theme of the week and really the theme of a lot of the year so far," Doyle said, "and it's going to take likely a rebound in equities to see the U.S. dollar strengthen, especially against the euro, Swiss franc and Japanese yen."