Dollar at multi-week lows as U.S. yields fall on reduced Fed tightening bets

The dollar eased to a two-week low against its peers on Wednesday after U.S. bond yields dropped as traders took back hopes that the U.S. Federal Reserve will tighten its policy earlier than planned. 

The dollar index dropped to a two-week low of 92.246, sliding further from a five-month high of 93.439 hit on March 31. It last traded at 92.343. 

The dollar rallied the strongest in years in the last quarter on hopes that a fast U.S. economic recovery and inflation could urge the Fed to abandon its plan to keep interest rates near zero until 2024. 

The dollar index climbed 3.6% in the quarter, its highest quarterly gain in three years. Against the Japanese yen, the dollar was up 7.2%, the biggest since end-2016. The latter was on the defensive at 109.77 per yen. 

The euro rallied to a two-week peak of $1.18785 and last traded at $1.1867. The common currency stood at 85.90 against the British pound. 

Elsewhere, the Aussie firmed to a near two-week peak of $0.7652 against the dollar. The pound fell to $1.3824 from Tuesday’s high of $1.3910.