The dollar fell against a basket of the other major currencies on Tuesday, following reports that North and South Korea have agreed to hold a summit next month, in a sign of easing tensions on the peninsula.
The prospect of tensions easing between North Korea and South Korea, and with the U.S. bolstered risk appetite.
North Korea also indicated that it could be willing to dispose of its nuclear technology and agreed to suspend all weapons testing during the summit in April.
The dollar remained slightly lower against the safe-haven yen, with USDJPY last at 106.08, holding above an overnight low of 105.85.
Market sentiment was also boosted as fears eased over the prospect of a trade war between the U.S. and its major trading partners, sparked by U.S. President Donald Trump’s proposed steel and aluminum import tariffs.
Markets took the view that the planned tariffs were a negotiating tactic after Trump stepped up pressure on Mexico and Canada on Monday, saying he would lift planned tariffs on steel imports if they signed a new version of the North American Free Trade Agreement or NAFTA.
The dollar fell to the day’s lows against the euro, with EURUSD rising 0.58% to 1.2407, extending its recovery from Monday’s low of 1.2268, hit amid concerns over inconclusive Italian election results.
The pound was higher against the softer dollar, with GBPUSD climbing 0.4% to 1.3904.
The risk sensitive Australian and New Zealand dollars rallied, with AUDUSD advancing 0.75% to 0.7820 and NZDUSD up 1.04% to 0.7299.