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NEW YORK: The US dollar plummeted to a seven-week low against the euro on Tuesday, as a better-than-expected US trade deficit led investors toward riskier currencies.
At 2100 GMT, the euro was trading at 1.3643 dollars, up from 1.3585 late Monday in New York.
The euro fell back against the yen, to 131.68 yen from 132.46 yen.
The dollar also weakened against the Japanese currency, to 96.49 yen from 97.50 yen.
The European single currency had jumped to 1.3707 dollars - the highest level since March 23 - around 1230 GMT, after the publication of positive US trade data.
The US trade deficit rose in March for the first time in seven months, to 27.6 billion dollars, but the increase was less than most analysts' expectations of 29.0 billion.
"The USD (dollar) initially dipped lower against the majors following the US trade report, before players began to take profit on short USD positions," said Michael Woolfolk at Bank of New York Mellon.
"The USD has been oversold by any measure over the past week, and is due for a correction. However, the market seems comfortable with the 'green shoots' rally and buying riskier assets," Woolfolk said.
The trade data contained other reassuring numbers as well, according to Nigel Gault, chief US economist at IHS Global Insight.
Gault noted that the composition of exports in March "is suggesting that the global economy is beginning to stabilise."
The better-than-expected reading on US trade emboldened investors into buying riskier currencies, like the euro.
The dollar had slipped against the yen in Asian trade as safe-haven demand for the US unit declined on hopes of an improvement in the battered global economy, dealers said.
Many market watchers believe the dollar is likely to decline against most rival currencies in the coming months as risk aversion recedes.
However, as the yen has also benefited from safe-haven flows some forecasters are predicting the Japanese currency will also lose its allure.
European Central Bank governor Jean-Claude Trichet on Monday signalled that the global economy is near a turning point.
"We are, as far as growth is concerned, around the inflection point in the (economic) cycle," he told a meeting of central bankers.
In late New York trading, the dollar stood at 1.1056 Swiss francs, compared with 1.1091 late Monday.
The pound was at 1.5272 against 1.5127. - AFP/de
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