Market Jitters Ease as Dollar Retreats Amid U.S. Geopolitical Developments

The U.S. dollar weakened for a second consecutive day in Asian trading, as geopolitical concerns and dovish Federal Reserve comments reduced its appeal as a safe haven. Despite the easing of market jitters following U.S. military actions in Venezuela, the dollar index dropped amidst increased risk-taking on Wall Street.

The U.S. dollar experienced a decline for the second day amid Asian trading sessions on Tuesday, largely driven by a mix of geopolitical developments and dovish commentary from Federal Reserve officials, leading to increased risk appetite on Wall Street. The dollar index sank by 0.2%, trading at 98.216, as it extended its losses after breaking a four-day winning streak on Monday.

According to currency strategist Rodrigo Catril of National Australia Bank in Sydney, geopolitical events such as the U.S. military actions in Venezuela have had limited immediate impact on market dynamics. The situation reduced the allure of safe-haven assets, placing the U.S. dollar under pressure.

In addition to these geopolitical elements, U.S. manufacturing activity saw a greater-than-expected contraction, further weighing on the dollar's strength. Dovish tones from Minneapolis Federal Reserve President Neel Kashkari contributed to a cautious outlook on economic fundamentals, with expectations of policy easing remaining on market agendas.

(With inputs from agencies.)