U.S. Dollar Drops Following PPI Data, Powell's Comments

The U.S. dollar declined against its major counterparts in the New York session on Tuesday, following the release of producer inflation data for April and Federal Reserve Chairman Jerome Powell's speech at a banking event in Amsterdam.

Powell said that he expects inflation to cool in the coming months, but cautioned that he is less confident in this forecast.

Policymakers do not expect a smooth road on inflation, as it showed no significant signs of progress in the first three months of the year, he said.

Powell reiterated that the central bank will likely hold interest rates at their current levels for a longer period to let policy do its work.

Powell noted that the PPI reading is broadly mixed, but did not call it hot.

Data from the Labor Department showed that the producer price index for final demand climbed by 0.5 percent in April after a revised 0.1 percent dip in March.

Economists had expected producer prices to rise by 0.3 percent compared to the 0.2 percent uptick originally reported for the previous month.

The greenback touched 1.0825 against the euro, its lowest level since April 10. Further downtrend may take the currency to a support around the 1.10 area.

The greenback fell to 1.2592 against the pound, setting an 8-day low. The greenback is likely to face support around the 1.27 region, if it falls again.

The greenback pulled back to 156.22 against the yen and 0.9054 against the franc, from its early nearly 2-week highs of 156.78 and 0.9102, respectively. The greenback is poised to challenge support around 147.00 against the yen and 0.89 against the franc.

The greenback weakened to 4-day lows of 1.3632 against the loonie and 0.6038 against the kiwi, from an early 4-day high of 1.3690 and a 5-day high of 0.5995, respectively. The greenback is seen finding support around 1.34 against the loonie and 0.62 against the kiwi.

The greenback touched 0.6627 against the aussie, down from an early 5-day high of 0.6579. Next key support for the currency is likely seen around the 0.68 level.