The U.S. dollar traded weak against most of its major rivals on Tuesday, as the safe haven Japanese yen found support from investors after growth worries resurfaced following the International Monetary Fund lowering its outlook for global economic growth for the year.
News that the Trump administration is considering imposition of tariffs on a wide range of goods from the European Union contributed as well to fears about global growth.
The Dollar Index declined to a low of 96.86. However, it recovered subsequently and was last seen hovering around 97.00, still down in negative territory, albeit with a marginal loss.
Against the Euro, the dollar dropped to a low of 1.1286 before recovering to 1.1266, netting a marginal loss.
The Pound Sterling strengthened to $1.3121, but pared its gains subsequently and was moving around the unchanged line in late afternoon trades.
Markets were looking ahead to the scheduled meeting between British Prime Minister Theresa May and top European politicians ahead of the EU summit on Wednesday.
The Yen gained more than 0.3% against the dollar as it strengthened to 111.12 a dollar, amid growing concerns about trade war and the IMF's downward revision on global growth outlook.
The dollar lost marginal ground against the Aussie, Swiss franc and the loonie as well.
The IMF today downgraded its outlook for growth in the United States, Europe, Japan and the overall global economy, citing the trade tensions, weaker business confidence, tighter financial conditions and higher policy uncertainty.
The IMF said in its World Economic Outlook that it expects the world economy to grow 3.3% this year, down from 3.6% in 2018. That would match 2016 for the weakest year since 2009. In its previous forecast in January, the IMF had predicted that international growth would reach 3.5% this year.
The IMF said the growth momentum is expected to gain steam in the second half of this year and projected a 3.6% growth for 2020, unchanged from the January prediction.
In economic releases from U.S. today, a report from the Commerce Department said new orders for U.S. manufactured goods fell by slightly less than expected in the month of February, dropping by 0.5%, after coming in virtually unchanged in the preceding month. Economists had expected orders to slide by 0.6%.
Traders now await the minutes of the Federal Reserve's March meeting for clues about the outlook for interest rates. The Fed is scheduled to release the minutes on Wednesday.