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The dollar displayed strength against some of its major rivals on Tuesday amid news about escalating trading tensions between the U.S. and China.
U.S. Trade Representative Robert Lighthizer confirmed the U.S. plans to raise tariffs on $200 billion worth of Chinese goods to 25% on Friday.
The comments from Lighthizer came after President Donald Trump threatened to implement the tariff increase in a post on Twitter on Sunday, claiming trade talks between the U.S. and China are moving "too slowly."
The dollar index rose to 97.74, but pared most of its gains as the session progressed, and was hovering around 97.60 by late afternoon, up just 0.05% from previous close.
The U.S. dollar weakened against the Japanese yen, with the latter's safe haven appeal tilting the scale in its favour after the U.S. said it will start imposing additional tariffs on Chinese goods from this Friday.
The yen strengthened to 110.26 a dollar, gaining nearly 0.5% from 110.17 a dollar late Monday.
The euro was down by about 0.11% at $1.1188, easing from $1.1200. Earlier in the day, the euro had weakened to $1.1219 after the European Commission slashed the growth forecasts for the euro area for this year and next. Disappointing data out of Germany and France weighed as well on the euro.
The EC cited a "more pronounced" slowdown since the second half of last year, caused mainly due to weaker external demand, disruption in the automobile sector, policy uncertainty and Brexit worries.
In its Spring 2019 forecast, the executive arm of the European Union trimmed the growth forecast for this year to 1.2% from 1.9% predicted in the Autumn forecast in February.
The greenback was up more than 0.2% at $1.3071 against British Pound Sterling.
Against Canadian loonie, the U.S. dollar gained 0.19% with the Dollar-Loonie pair trading at 1.3474.
Against Swiss franc, the dollar edged up 0.13% to 1.0193, and against the Aussie, the dollar was down 0.24%. The AUD-USD pair was last seen trading at 0.7008.
