U.S. Dollar Extends Fall Amid Risk Appetite

The U.S. dollar extended its weakness against the other major currencies in the early European session on Tuesday amid risk appetite, as market participants diverge on U.S. rate hike prospects this year. Meanwhile, a dearth of major data and bets that a rate hike is unlikely at the Fed's September or November meetings, also weighed on the currency.

The U.K.'s FTSE 100 index is currently up 0.45 percent or 31.07 points at 6,859, France's CAC 40 index is up 0.82 percent or 36.05 points at 4,425 and Germany's DAX is up 0.93 percent or 97.28 points at 10,591.

Investors looked ahead to a key speech from Fed Chair Janet Yellen this Friday following hawkish rhetoric from a couple of Fed officials.

In the Asian trading today, the greenback traded lower against its major rivals.

In the early European trading, the U.S. dollar fell to a 15-month low of 0.7340 against the NZ dollar and nearly a 3-week low of 1.3209 against the pound, from early highs of 0.7260 and 1.3128, respectively. If the greenback extends its downtrend, it is likely to find support around 0.74 against the kiwi and 1.36 against the pound.

Against the euro, the yen, the Swiss franc and the Australian dollar, the greenback dropped to 4-day lows of 1.1355, 99.94, 0.9593 and 1.3164 from early highs of 1.1315, 100.39, 0.9632 and 0.7616, respectively. The greenback is likely to find support around 1.14 against the euro, 98.00 against the yen, 0.95 against the franc and 0.78 against the aussie.

Against the Canadian dollar, the greenback slipped to 1.2884 from an early high of 1.2946. On the downside, 1.26 is seen as the next support level for the greenback.

Looking ahead, Markit's flash U.S. manufacturing PMI for August, U.S. Richmond Fed manufacturing index for August and U.S. new home sales data for July are set to be published in the New York session.