The U.S. dollar lost ground against the euro Tuesday as markets awaited a key U.S. trade deficit report and Luxembourg's premier warned about threats to robust growth.
The euro bought US$1.2987 in European trading, up from US$1.2965 in New York late Monday. The British pound rose to US$1.8917 from US$1.8903.
The dollar fell against the Japanese yen, dropping to 107.77 yen from 107.82 late Monday.
In Luxembourg, Prime Minister Jean-Claude Juncker expressed concern about the strong euro and high oil prices, saying that they were contributing to Europe's weak economic performance.
Speaking at the start of the second day of a European finance ministers' meeting, Juncker called present exchange rates "contrary to robust growth." Luxembourg currently chairs the EU.
Markets were awaiting U.S. trade deficit data due later in the day. The market consensus is for the deficit to widen to US$58.3 billion in February from US$58.27 billion in January. A much wider than expected deficit could rekindle concerns over the American economy, dampening the dollar's recent bullishness.
The data is usually interpreted together with U.S. Treasury international capital flows data, due Friday, which will show if there was enough money flowing into the United States to fund the deficit.
Investors are also waiting for the minutes of the March 22 Federal Open Market Committee meeting. The March FOMC statement -- which took a more hawkish tone on inflation -- is said to have been one of the catalysts for the current positive sentiment toward the dollar.
At the moment, the Fed is expected to continue raising rates by a quarter of a percentage point to bring them up to 4 percent by the end of the year from 2.75 percent now.