The dollar held near a seven-month low on Tuesday amid bets the U.S. central bank will start cutting interest rates next month.
The weakness in the US currency lifted the euro to its highest level this year, while the pound held near a one-month high. An index of emerging market currencies also hit a record high.
The dollar index, which measures the greenback against six major currencies, was last at 101.95 after touching its lowest since Jan. 2 at 101.82 on Tuesday. The index fell more than 2 percent in August and is set to fall for a second straight month.
Expectations of a rate cut lifted the Australian and New Zealand dollars to their highest levels in a month. The Australian dollar was last at $0.6719. The New Zealand dollar rose to $0.61205.
The Japanese yen fell slightly to 146.98 against the dollar, staying close to a nearly two-week high touched in the previous session but still far from a seven-month high of 141.675 hit in early August.
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