2018.05.2401:59:00UTC+00Dollar Retreats After Fed Minutes; Euro Under Pressure

The dollar lost momentum on Thursday following minutes of the Federal Reserve's last policy meeting and the threat by U.S. President Donald Trump of imposing new tariffs on imported cars.

While most policymakers thought it likely another interest rate increase would be warranted - in line with market expectations - the minutes showed the Fed would tolerate inflation rising above its goal for a time.

The dollar index, which measures the greenback against a basket of six major currencies, retreated to 93.839 from its five-month peak of 94.195 hit just before the release of the Fed's minutes.

The greenback's fall accelerated as Trump appeared to have opened a new front in the trade war by considering new tariffs, this time on cars, just days after Washington agreed with China to put “on hold” its plan to impose tariffs on $150 billion worth Chinese goods.

The dollar was down 0.6 percent against the yen to 109.44.

The euro rebounded 0.1 percent on the day at $1.1709 after dropping to a six-month low of $1.1676 on Wednesday.

The euro was pressured by concerns over an economic slowdown in the currency bloc and political risks in Italy. Investors were unnerved by political developments in Italy, where the coalition government proposed by the anti-establishment 5-Star and far-right League could tap eurosceptic economist Paolo Savona as economy minister.

The British pound eased at $1.3374, after notching a five-month low of $1.3305 following weak UK inflation data.