The dollar fell to a three-month low against the euro and to the weakest value since the beginning of January against the Japanese yen due to the prospect of the Fed's monetary policy easing to reduce the demand for the US currency. Euro added 2 percent and reached a three-month high of 1.1412 dollars. The dollar fell by 0.3 percent to 106.97 yen, dropping below the psychologically important mark of 107 yen per dollar. The Japanese currency is rising against the background of tensions between the US and Iran. Recall, Tehran said that the US sanctions have permanently closed diplomatic channels between the two countries.

In addition, the Fed's hints accelerated the dollar sale. The regulator made it clear that by the end of the year, it will lower interest rates amid growing concerns about a slowdown in economic growth and the effects of tariff wars between the United States and China. The yield on 10-year US Treasury bonds again fell below 2%, reducing the advantage of the interest rate that the dollar has enjoyed in recent years. "We expect that the proactive reduction of the Fed's rates will temporarily affect the dollar, especially in relation to the currencies of the G10 countries, since the advantage of high interest rates is eliminated in the context of slowing global growth," Barclays said. However, the Fed's ability to support expanded US expansion contrasts with a clear steady slowdown and growing risks in China and Europe, which implies a recovery of the dollar in 2020.

Investors are waiting to see whether Trump and Xi can at least conclude a truce in a trade war when they meet at the G20 summit in Osaka later this week. Trump believes that his meeting with Xi is an opportunity to "show his interest" and see where China is in their trade dispute. However, the current state of affairs suggests that the two leaders are unlikely to agree to a deal.