U.S. Dollar Falls Amid Rate Cut Expectations

The U.S. dollar weakened against other major currencies in the Asian session on Tuesday, as traders await the chance of an earlier Federal Reserve interest rate cuts due to signs of a slowing U.S. economy.

Traders also await cues from a slew of central bank meetings, with the European Central Bank and the Bank of Canada both expected to cut rates this week ahead of next week's FOMC meeting, which concludes on June 12.

After the release of weak U.S. manufacturing and construction spending data, investors now await the upcoming job data for indications of economic strain.

In the Asian trading today, the U.S. dollar fell to 2-1/2-month lows of 1.0916 against the euro and 0.8943 against the Swiss franc, from yesterday's closing quotes of 1.0904 and 0.8957, respectively. If the greenback extends its downtrend, it is likely to find support around 1.10 against the euro and 0.87 against the franc. Against the pound and the yen, the greenback slid to nearly a 3-month low of 1.2818 and more than a 2-week low of 155.80 from Monday's closing quotes of 1.2807 and 156.03, respectively. The greenback may test support near 1.29 against the pound and 152.00 against the yen.

The greenback slipped to more than a 2-week low of 0.6699 against the Australian dollar and nearly a 3-month low of 0.6198 against the NZ dollar, from yesterday's closing value of 0.6689 and 0.6198, respectively. The next possible downside target for the greenback is seen around 0.67 against the aussie and 0.62 against the kiwi.

Against the Canadian dollar, the greenback edged down to 1.3619 from Monday's closing value of 1.3627. On the downside, 1.37 is seen as the next support level for the greenback.

Looking ahead, Germany's unemployment data for May and Eurozone consumer inflation expectation for April are due to be released in the European session.

In the New York session, U.S. logistics managers index for May, U.S. factory orders for April and U.S. Redbook report are slated for release.