Forex - Dollar index extends losses, touches 6-week lows

The dollar extended losses against the other major currencies on Tuesday, pressured lower by the view that the Federal Reserve won’t accelerate the pace of monetary tightening. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.49% at 99.67 at 09.19 ET, its weakest since February 6. Chicago Fed President Charles Evans said Monday the Fed is on track to raise rates twice more this year, underlining the view that the central bank will stick to a gradual pace of tightening after last week’s rate hike. The dollar was also on the defensive after G20 financial leaders dropped a pledge to keep global trade free and open from a policy statement at the weekend, following opposition from the increasingly protectionist Trump administration. The move renewed uncertainty over U.S. trade relations and by extension the Trump administration’s concerns over the strong dollar. The euro hit six-week highs as concerns over the French presidential elections eased, with EUR/USD advancing 0.59% to 1.0802, its highest level since February 2. Opinion polls showed that Emmanuel Macron consolidated his status as frontrunner in France's presidential election in a televised debate on Monday against his main rival, far-right anti-EU leader Marine Le Pen. Le Pen has pledged to take France out of the euro and hold a referendum on EU membership. Sterling rose to three-week highs, with GBP/USD up 0.75% to 1.2452 after data showing that the annual rate of inflation in the UK rose to the highest since September 2013 in February. The euro was slightly lower against the pound following the inflation report, with EUR/GBP down 0.16% at 0.8674. The dollar was little changed against the yen, with USD/JPY at 112.54 after falling as low as 112.29 overnight, its weakest since February 28. Meanwhile, the Canadian dollar hit the day’s highs after stronger-than-expected domestic retail sales data and as prices of oil, a major Canadian export, rose. USD/CAD was down 0.49% at 1.3283, not far from the two-week lows of 1.3275 set on March 16.