The dollar fell against a basket of currencies on Monday as recent strong economic data eased concerns about the global economy and prompted investors to reduce their hedge positions against the dollar.
The euro is further away from last week's one-month low as investors close positions ahead of this week's ECB meeting.
The pound rebounded from a week low against the dollar. Investors are watching whether British Prime Minister Teresa May can persuade the EU to postpone Britain's withdrawal from the EU again.
"Global growth expectations have bottomed out, and this is not just a sign of recovery," said Paresh Upadhyaya, head of foreign exchange strategy at Amundi Pioneer Investment Management.
Upadhyaya said encouraging economic data released by China and the United States last week boosted market sentiment and led to growth-oriented currencies such as the Australian and New Zealand dollars.
In 1842 GMT, the dollar index, which tracks the trend of the dollar against the euro, the yen, the pound and three other currencies, fell 0.35% to 97.056.
"We have a neutral view of the dollar," wrote Richard Turnill, chief global investment strategist at BlackRock. "It has been seen as a'safe haven'attraction, but high valuations and narrowing growth gaps with the rest of the world may limit its gains."
This view of the dollar stimulated investors to buy other currencies on Monday.
The euro rose 0.38% to $1.12605 against the dollar, hitting $1.11830 on Tuesday, its lowest level since March 8. EURJPY = rose to a two-week high of 125.575 yen.
Data showed that traders cut their long positions in the euro last week, the most in nine months, as the yield on European core bonds (yields) entered a negative range and PMI data showed that the eurozone economy was in a difficult position.
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