The U.S. dollar fell on Wednesday to its lowest in about a month against a basket of major currencies, on doubts over whether the U.S. Federal Reserve will raise interest rates in September given China's devaluation of the yuan.
The euro hit its highest level against the greenback in about a month at $1.1215 after China's central bank set its daily mid-point reference at 6.3306, even weaker than Tuesday's devaluation.
The euro rose against the dollar on worries that China's actions, and the ensuing market volatility, could prompt the Fed to avoid increasing rates next month. The dollar stands to benefit from the Fed's first rate increases in nearly a decade since they are expected to drive investment flows into the United States.
"China is still a big unknown, and the market is pricing in the worst," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York. "Many people in the market think that there's less chance of a September hike, and that's one of the factors that has helped lift the euro."