Investing.com – The dollar fell to the day’s lows against the yen on Monday as heightened trade tensions between the U.S. and China hit market sentiment, bolstering safe haven demand for the Japanese currency.
USD/JPY was down 0.23% to 110.40 by 10:31 AM ET (14:31 GMT), pulling away from Friday’s three-week highs of 110.90.
Market sentiment deteriorated as China’s retaliatory action against trade tariffs imposed by the Trump administration reignited fears of a possible trade war between the world’s two largest economies.
The safe haven yen is often sought by investors in times of geopolitical tensions and market turmoil.
The euro was little changed against the dollar, with EUR/USD at 1.1603, up from an earlier low of 1.1565.
The single currency remained on the back foot after a hawkish Federal Reserve pointed to a faster pace of monetary tightening this year while the European Central Bank gave a dovish signal.
The euro fell 1.34% against the dollar in the previous week after the ECB outlined plans to keep interest rates on hold until at least the middle of next year.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was last at 94.52, holding below Friday’s eleven-month high of 95.13.
The pound was lower against the dollar, with GBP/USD losing 0.29% to trade at 1.3238.
Earlier in the day, the British Chambers of Commerce downgraded its growth forecast for the UK as uncertainty over Brexit and fears of a global trade war hit confidence.