LONDON: The dollar hit a new one-month low on Tuesday as the euro extended gains while a broad selloff in stock markets didn't boost the US currency's safe haven appeal.
The dollar fell by 0.3 per cent to 101.79, its lowest level since April 26 against a basket of rivals.
The euro, which was the stand out gainer on Monday after European Central Bank President Christine Lagarde indicated negative interest rates, a euro zone feature for eight years, will most likely be gone by the end of summer, extended gains.
The single currency was up 0.4 per cent at US $1.0729 in early London trading as traders cut back some of their short bets after Lagarde said interest rates were likely to be in positive territory by the end of the third quarter.
Many observers believe that the ECB is too hesitant but the fact that a lift-off is now very likely to happen in July and that the ECB seems willing to hike rates further after that is positive for the euro, Commerzbank strategists said in a note.
The euro fell to a January 2017 low of US $1.0349 earlier this month, but rebounded by 3.6 per cent since that low in seven trading sessions.
The risk-sensitive Aussie dollar dropped by 0.41 per cent to US $0.70815, while New Zealand's kiwi was 0.46 per cent weaker at US $0.6438 a day before the Reserve Bank of New Zealand is expected to raise the key rate by half a point.
The stock markets fell with the US stock futures down more than 2 per cent.
The currency market volatility was volatile with the index holding firm at 9.6 per cent, not far from a two-year high above 10.5 per cent hit earlier this month.