Dollar slides against euro and yen ahead of Fed minutes

Sha Ying | CNBC

The dollar fell on Tuesday, hitting a six-month low against the euro and a two-month trough against the Swiss franc, as U.S. Treasury yields retreated and the timing of the Federal Reserve's reduction in its stimulus efforts remained uncertain. U.S. 10-year bond yields dropped after hitting two-year highs the previous session in anticipation of an eventual tapering of the Fed's bond-buying program.

Many investors believe the Fed remains likely to be the first among major central banks to unwind its liquidity program, which combined with an improving U.S. economy and rising risk aversion, should favor the dollar. The dollar fell 0.3 percent to 97.21 yen.

In thin trade, the euro rose 0.7 percent to $1.3421 as the yield premium that 10-year U.S. Treasury notes offer over German Bunds narrowed. The euro had reached a session peak of $1.3452, according to Reuters data, its highest since Feb. 14.

Mankash Jain, head of FX and investment management at Solo Capital, a London-based hedge fund, said volumes are nearly 50 percent lower than in April, so price moves can get exaggerated.

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