The dollar fell on Wednesday from its strongest levels in 2018 against a basket of currencies due to mild profit-taking, but is expected to resume its rise on solid USA economic growth and more interest rate increases anticipated from the Federal Reserve.
The dollar climbed 0.5 percent to 109.68 yen and edged up 0.3 percent to 1.0044 Swiss franc on fading worries about U.S. President Donald Trump's decision to pull the United States out of the Iran nuclear deal.
THE US dollar surged to a 2018 high against its rivals on Tuesday as a rout of the euro prompted traders to buy the greenback despite some concerns its rally may have been too quick.
"It's a continuation of what we have been witnessing for the past few weeks", said Christin Tuxen, FX strategist at Danske Bank.
USA crude fell 2.93 percent to $68.66 per barrel and Brent was last at $74.28, down 2.48 percent on the day. "If (Trump) decides to keep the deal and negotiate you could see oil prices fall".
The three-week long rally for the USA currency, in which it has reversed several months of weakness, has caused the unwinding of popular long bets on emerging market and G10 currencies.
Forecasts for rising rates in the euro zone, by contrast, are being pushed back.
Concerns about the USA exit from an worldwide nuclear deal with Iran had also supported the dollar in early Asian trading.
An employee of a bank counts USA dollar notes at a branch in Hanoi, Vietnam May 16, 2016.
Trump had on Tuesday pulled the United States out of an worldwide nuclear deal with Iran, raising the risk of conflict in West Asia, upsetting European allies and casting uncertainty over global oil supplies.
Some of the USA dollar's biggest gains on Tuesday came against the euro and the Australian dollar which declined by 0.4 per cent and 0.8 per cent respectively.
On Monday, Italy's two largest parties resisted President Sergio Mattarella's call to rally behind a "neutral government". It was last up 0.4 percent at 93.100 in late USA trading. Palladium fell 0.1pc at $970.70 an ounce.
The dollar index, which measures the greenback against a basket of six major currencies, was up 0.1 per cent at 93.199.
The Swiss franc, traditionally a safe-haven currency, fell 0.1 percent versus the dollar but gained 0.1 percent against the euro.
The Italy/Germany 10-year government bond yield spread hit its widest in three weeks at 128 basis points, while Italian 10-year yields shot up to yield 1.863 percent.