The dollar nursed losses on Wednesday after skidding to a 10-month low against a currency basket as Republican legislators' failure to pass a stalled healthcare bill raised fears for the rest of President Donald's Trump reform agenda.
Republican efforts to overhaul or repeal Obamacare collapsed in the U.S. Senate on Tuesday, rattling financial markets and casting doubt on the chances of getting Trump's economic plans, such as tax reform and stimulus, through a divided Congress.
The dollar index, which tracks the greenback against a basket of six major rivals, edged up 0.2 percent to 94.780 (DXY) after falling as low as 94.476 on Tuesday, its lowest level since September 2016.
The euro inched 0.2 percent lower to $1.1534 , after rising as high as $1.1583 on Tuesday, its highest since May 2016.
The European Central Bank will hold a policy meeting on Thursday, with participants seen likely to adjust their language as they edge the ECB towards normalizing policy. ECB President Mario Draghi roiled markets last month when he opened the door to potential adjustments to the quantitative easing program.
Expectations that the Federal Reserve will be more cautious about raising interest rates also weighed on the greenback.
Economic data on Tuesday showed U.S. import prices falling for a second straight month in June as the cost of petroleum products declined further, suggesting inflation pressures could remain weak for a while.
Fed Chair Janet Yellen signaled caution in congressional testimony last week, with disappointing U.S. inflation and retail sales data on Friday adding to evidence that the central bank has reason to take its time in tightening.
The dollar was flat against its Japanese counterpart at 112.065 yen , well below its nearly four-month high of 114.495 touched last week. It fell as low as 111.685 on Tuesday, its lowest since June 27.
The Bank of Japan will also conclude a policy meeting on Thursday. Policymakers are expected to raise their economic growth forecasts but cut their rosy inflation outlook, sources say, reinforcing expectations it will lag well behind major global central banks in dialling back its massive stimulus program.
Source: Bloomberg Pro Terminal
Trader Bozhidar Arabadzhiev
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