The dollar fell versus most major peers as investors mulled how the latest tariffs would affect the US economy and those of its trading partners. The Australian dollar led gains following the RBA's policy decision. 

The Bloomberg Dollar Index drops as much as 0.3%, snapping Monday's 0.5% advance as traders gameplanned what rates from 25% to 40% on goods from Japan to Malaysia would do to regional trade and growth.

Trump has imposed 25% on goods from Japan and South Korea, beginning Aug. 1.

AUD/USD rallies as much as 1% to 0.6558 after Australia's central bank surprised investors and economists by keeping interest rates unchanged.

Governor Michele Bullock said the decision was about the timing of a move, rather than the direction.

EUR/USD up by 0.5% to 1.1765 day high; the European Union is seeking to conclude a preliminary trade deal with the US this week that would allow it to lock in a 10% tariff rate beyond an Aug. 1 deadline as they negotiate a permanent agreement.

One-week risk reversals extend bearish repricing, trade at 23bps in favor of the greenback.

USD/JPY rises as much as 0.3% to 146.45, extending Monday's 1.1% rally.

The euro and yen volatility term structures are sending contrasting signals as traders hedge selectively into event risk and summer illiquidity.

GBP/USD pares a 0.3% to trade modestly higher at 1.3609.

Source: Bloomberg