SINGAPORE, Aug 1 (Reuters) – The dollar inched up from a 2-1/2 year low versus the euro on Tuesday, but its outlook remained clouded by U.S. political turmoil and doubts about whether there will be another Federal Reserve rate hike this year.
The greenback had slipped on Monday, pressured by month-end portfolio adjustments, while the euro was supported by expectations for a more hawkish monetary policy stance from the European Central Bank.
Uncertainty on the U.S. political front was also seen weighing on the currency, after President Donald Trump ousted recently hired White House communications chief Anthony Scaramucci on Monday.
The euro edged down 0.1 percent to $1.1828, pulling back from a peak of $1.1846 touched in early Asian trade on Tuesday, its strongest level since January 2015.
While expectations for the euro to head higher are likely to remain intact, the common currency might take a breather against the dollar as investors look to U.S. economic data this week for fresh impetus, said Stephen Innes, head of trading in Asia-Pacific for OANDA in Singapore.
Traders might trim some long positions in the euro for now and wait for opportunities to buy the euro again on dips, he said.
“I don’t think they are going to change their overall bias that the euro is going to be higher, but…if this really was month-end move driven, we should see a little bit of a retracement,” Innes said, referring to the euro’s 0.8 percent rise on Monday.
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