Dollar gains fade on missile explosion in Poland

The dollar on Wednesday hit just over multi-month lows against most major currencies, as flows supporting the safe-haven currency slowed after US President Joe Biden said a missile that caused an explosion in Poland may not have been launched from Russia.

NATO members, Poland and Ukraine, said on Tuesday that the explosion that killed two people on the Polish side of their borders was likely caused by a Russian-made missile, raising fears of an escalation in the war.

Biden said that Russia likely did not launch the missile, and yet there are ongoing investigations.

Russia denies responsibility for the blast. NATO ambassadors will hold an emergency meeting on Wednesday, followed by a news conference at approximately 1130 GMT.

In the latest transactions, the euro rose 0.47% to $1.0399. It headed to regain the highest level in four and a half months at $1.0481 that it touched the day before after US producer price inflation came in below expectations, boosting bets that consumer price inflation, which came in less than expected last week, will is repeated.

The single European currency had retreated from this level to 1.028 dollars after the news of the explosion in Poland, which pushed dealers towards the safe haven dollar, which also caused stocks to decline.

The dollar rose 0.2 percent against the Japanese yen, recording 139.63 yen, amid rising long-term US Treasury yields during trading in Tokyo.

The dollar fell 0.15 percent against the Swiss franc to 0.9418, close to its lowest level in seven months recorded on Tuesday.

The dollar index, which measures the performance of the US currency against six major currencies, fell 0.24 percent to 106.26.