The dollar fell against most currencies on Tuesday, weighed by a drop in U.S. Treasury yields amid a cautious global sentiment with political worries in Europe and weaker stock and commodity markets after a long U.S. holiday weekend.
"There is a whiff of risk aversion about the markets," said Shaun Osborne, chief FX strategist at Scotiabank in Toronto, after Japan's Nikkei dropped, European stocks fell and U.S. equity indexes slid.
Commodities were also on the defensive, with U.S. crude oil futures trading below $50 per barrel.
Benchmark U.S. 10-year Treasury yields fell to a more than one-week low, and the dollar was further undermined by weaker-than-expected U.S. consumer confidence data.
In the euro zone, falls in inflation in Spain and several German regions as well as European Central Bank chief Mario Draghi's commitment to continued emergency stimulus initially pushed the euro lower.