In recent public appearances, European Central Bank policymakers have argued that their steps to ease access to credit for businesses and households have worked, offering vital stimulus to an economy shocked by the financial crisis.
Against the perceived safe-haven yen, the dollar slipped 0.3 percent to 112.090 after rising as high as 112.285 yen, its highest since May 17.
The euro rallied against the US dollar on Tuesday after European Central Bank President Mario Draghi fueled market expectations the ECB will reduce stimulus later this year, while the dollar's weakness helped lift crude prices, APA reports quoting Reuters. The head of the Federal Reserve, Janet Yellen, and one of her lieutenants, Patrick Harker, said on Tuesday that they expected to continue raising US interest rates, but it couldn't rally the dollar.
Draghi "offered the first inclination that central bank stimulus could soon be wound in", Jasper Lawler, a market analyst at London Capital Group, wrote in a note, Bloomberg reported.
Against the USA dollar the euro reached highs of $1.1389, a gain of around 1.7 per cent from yesterday's lows before Draghi spoke. A stronger euro can hurt shares of European exporters since it can make their products more expensive for clients overseas to purchase.
Draghi meant to signal tolerance for a period of weaker inflation, not an imminent policy tightening, when his comments on Tuesday rattled markets, sources familiar with Draghi's thinking said.
The delay in the healthcare vote sent US stocks to session lows as it brought back worries about the time table of President Donald Trump's business-friendly agenda. The bond market sell-off and jump in the euro came as a dive in technology stocks after the latest global cyber attack sent European shares to a two-month low.
The dollar remained on the defensive after U.S. Senate Republican leaders postponed a vote on a healthcare overhaul on Tuesday, as they faced resistance from party members. The Russell 2000 of small-company stocks gave up 2 points, or 0.2 percent, to 1,414.
Banks traded higher, as the banking sector rose 0.66% on this news. Hong Kong's Hang Seng index edged 0.1 percent lower to 25,839.99. The Shanghai Composite index in mainland China lost 0.6 percent to 3,173.20, while Australia's S&P/ASX 200 gained 0.7 percent to 5,755.70.
OIL: Benchmark U.S. crude rose 56 cents to $43.95 per barrel in electronic trading on the New York Mercantile Exchange.
Compared to a recovery against the dollar after its 2 percent drop following the British elections, the pound has been unable to appreciate significantly against the euro. Brent, the global standard, lost 8 cents to $46.57 per barrel in London. That selling helped the dollar touch a fresh one-month high of 111.95 yen early on Tuesday.
The euro surged against the greenback to $1.1349, its highest since late August 2016.