U.S. Dollar Falls As China Covid Worries Reduce

The U.S. dollar weakened against its most major counterparts in the European session on Tuesday, amid a rally in European shares as China's financial hub Shanghai moved towards reopening and plans to gradually return to normality by late June.

Deputy Mayor Zong Ming said that the authorities will implement steps to reopen Shanghai in stages, with restrictions on movement to continue until May 21 to control virus infections.

Supermarkets, convenience stores and pharmacies were allowed to reopen from Monday.

Data from the Commerce Department showed that U.S. retail sales increased more than expected in April.

The report said retail sales climbed by 0.9 percent in April after jumping by an upwardly revised 1.4 percent in March.

Economists had expected retail sales to rise by 0.7 percent compared to the 0.5 percent increase originally reported for the previous month.

Excluding a rebound in sales by motor vehicle and parts dealers, retail sales rose by 0.6 percent in April after surging by 2.1 percent in March. Ex-auto sales were expected to edge up by 0.3 percent.

The greenback dropped to 6-day lows of 1.0556 against the euro and 0.9918 against the franc, after rising to 1.0428 and 1.0024, respectively in early deals. The greenback is seen finding support around 1.08 against the euro and 0.98 against the franc.

The greenback pulled back from its early highs of 0.6966 against the aussie and 0.6305 against the kiwi and reached 6-day lows of 0.7041 and 0.6376, respectively. The greenback is poised to face support around 0.72 against the aussie and 0.66 against the kiwi.

The greenback slipped to near a 2-week low of 1.2499 against the pound. Against the loonie, it was down at 1.2807, which was its lowest level since May 5. The greenback may face support around 1.28 against the pound and 1.25 against the loonie.

In contrast, the greenback climbed to 129.78 against the yen, hitting a 5-day high. On the upside, resistance is seen near the 131.00 level.