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US dollar drops after Trump adviser sees euro undervalued
[NEW YORK] The US dollar was holding near its session low after dropping quickly at the start of US trading after Trump adviser Peter Navarro called the euro "grossly undervalued," pushing euro-dollar to a fresh high while sending the greenback to new lows against the yen and other peers.
The Bloomberg dollar index was down approximately 0.4 per cent and earlier reached its lowest level since early December. Foreign exchange flows were mostly from fast money accounts adding to US dollar shorts that have been rebuilt since the weekend, said a trader in London.
The remarks from Mr Navarro come after the Trump immigration order and the border wall spat with Mexico that have heightened US businesses uncertainty, bolstering the view that the "Trump reflation trade" in FX seems to be running out of steam, traders have said.
In recent weeks, the US dollar has lost the momentum that carried the currency higher from election day into the end of 2016, leading to some shifting of positions.
Real money players who were expected to build US dollar long positions in anticipation of a fiscal boost to the economy are still holding fire, said traders who asked not to be identified because not authorized to speak publicly.