Investing.com – The dollar remained weaker against a basket of the other major currencies on Tuesday as concerns over the destabilizing impact of President Donald Trump’s immigration policy continued to generate risk aversion.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, dipped 0.12% to 100.31.
Investors remained on edge following Trump’s executive order limiting immigration from seven Muslim-majority countries, which sparked widespread protests in the U.S. and led to the firing of acting Attorney General Sally Yates, after she told justice department lawyers not to defend the order.
The dollar was slightly lower against the safe haven yen, with USD/JPY at 113.67, not far from overnight lows of 113.25.
The yen showed little reaction to the Bank of Japan’s decision to keep monetary policy on hold overnight.
The BoJ raised its growth forecast to 1.4% for the fiscal year ending March, compared with the previous projection of 1.0%.
The dollar also remained on the defensive after Friday’s weaker-than-expected figures on U.S. fourth quarter growth prompted speculation that the Federal Reserve will avoid hiking interest rates too quickly.
The Fed, which is to hold its next policy meeting on Wednesday, isn’t expected to raise interest rates, but investors are keen to hear how it views the economy and the future path of interest rates.
The euro pushed higher, with EUR/USD rising 0.17% to 1.0712.
Investors were looking ahead to data on fourth quarter growth out of the euro zone later in the day which is expected to show that growth ticked up to 0.4% from 0.3%.
The latest estimate on euro zone inflation and figures on unemployment are also due.
Meanwhile, sterling edged higher against the dollar, with GBP/USD up 0.14% at 1.2503 ahead of the Bank of England’s upcoming meeting on Thursday.
The BoE is expected to revise up its outlook for inflation and growth, but uncertainty over Brexit is expected to cloud the outlook.