Investing.com - The euro was lower on Monday as fears over the prospect of a global trade war and fresh political uncertainty in Germany pressured the single currency, while the dollar pared back overnight gains against the safe haven yen.
EUR/USD was down 0.47% to 1.1628 by 03:56 AM ET (07:56 AM GMT).
The euro came under pressure after Germany's interior minister offered to resign amid an escalating row over immigration policy, throwing into doubt the future of Chancellor Angela Merkel’s coalition government.
The euro had risen on Friday after European Union leaders reached a deal on migration, easing pressure on Merkel.
The single currency was also pressured lower after U.S. President Donald Trump ratcheted up trade tensions with the EU, claiming overnight that it treated the U.S. very badly and was “possibly as bad as China, just smaller”.
The comments raised the prospect that the U.S. could impose further tariffs on EU imports, possibly on auto imports.
The EU has threatened to retaliate with tariffs on up to $300 billion of U.S. products if the U.S. does penalize EU automakers.
The euro was weaker against the yen and the Swiss franc, with EUR/JPY down 0.48% to 128.77 and EUR/CHF shedding 0.33% to trade at 1.1540.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.39% to 94.60, boosted by the weaker euro.
The dollar pared back gains against the yen, with USD/JPY last at 110.74, after hitting a six week high of 111.06 overnight.
Demand for the dollar continued to be underpinned by the relative strength of the U.S. economy and the prospects of additional rate hikes by the Federal Reserve this year.
The pound was lower, with GBP/USD down 0.42% at 1.3155.
The trade sensitive Australian and New Zealand dollars were lower, with AUD/USD down 0.54% to 0.7368, re-approaching the one-and-a-half year low of 0.7322 reached last Wednesday.
NZD/USD was down 0.28% to an almost one-year low of 0.6749.