The U.S. dollar hit its lowest level against the euro in over a week and fell against other major currencies on Tuesday after Federal Reserve Chair Janet Yellen said it was appropriate for the Fed to proceed "cautiously" in hiking interest rates.
In her first comments since the Fed decided to hold rates steady two weeks ago, Yellen sounded cautious about threats to the recovery of the world's biggest economy, appearing to push back on more hawkish recent comments from a handful of her colleagues.
Yellen's comments hurt the dollar by pushing out expectations for the central bank's next interest rate hike. U.S. Fed funds futures implied traders saw a 43 percent chance of the central bank hiking rates in July, down from 51 percent on Monday.
"It was definitely dovish," said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago, in reference to Yellen's speech at the Economic Club of New York. "This is another push in the direction of fewer interest rate increases."