2018.08.2805:35:00UTC+00U.S. Dollar Falls Amid Risk Appetite On U.S.-Mexico Trade Deal

The U.S. dollar drifted lower against its key counterparts in early European deals on Tuesday, as the US-Mexico trade deal to replace NAFTA triggered a sell-off of safe-haven assets.

European shares rose, following positive lead from Asia, amid optimism that global trade tensions are easing after the U.S.-Mexico deal.

President Donald Trump indicated the U.S. would soon begin negotiations with Canada, but suggested that any agreement could be a separate deal.

Trump said that a deal involving all three countries is a possibility, although separate bilateral agreements are also likely.

Investors await U.S. reports on home prices and consumer confidence later in the day for more clues about the economy.

The greenback declined to a 5-day low of 1.2910 against the pound and near a 4-week low of 1.1700 against the euro, from its early highs of 1.2862 and 1.1663, respectively. The greenback is likely to challenge support around 1.32 against the pound and 1.19 against the euro.

The greenback slipped to 0.9765 against the Swiss franc, its lowest since April 23. The next likely support for the greenback is seen around the 0.96 level.

Pulling away from a 4-day high of 111.36 hit at 11:45 pm ET, the greenback edged down to 111.07 against the yen. The greenback is poised to find support around the 108.00 level.

Extending early slide, the greenback depreciated to 1.2945 against the loonie, a level not seen since June 8. If the greenback falls further, 1.27 is possibly seen as its next support level.

The greenback fell back to 0.6704 against the kiwi, not far from a 6-day low of 0.6712 hit at 8:30 pm ET. On the downside, 0.69 is likely seen as the next support level for the greenback.

The greenback reversed from an early high of 0.7321 against the aussie, easing to 0.7352. Next key support for the greenback is seen around the 0.75 mark.

Looking ahead, U.S. wholesale inventories for July, S&P/Case-Shiller home price index for June and consumer confidence index for August are due in the New York session.