The U.S. dollar pulled lower Tuesday, edging back from gains against Japan's yen, and softening against the euro ahead of the release of economic reports from Europe. The ICE dollar index , which measures the U.S. dollar's moves against six other major currencies, fell to 83.015 from late Monday's level at 83.276. The WSJ Dollar Index , an alternative gauge of the greenback's moves against a slightly wider basket, fell to 74.61 from 74.82. The U.S. dollar bought 101.51 yen, down from ¥101.81 late Monday in North America. Still, the yen waded at nearly five-year lows against the greenback, which pierced above the ¥100 mark last week, extending its gains on the back of the Bank of Japan's major monetary stimulus program launched in April. The dollar's surge against the yen has also been supported by data showing the U.S. economy remains on the recovery track. Barclays told clients Monday it continues to recommend long dollar/yen positions and expects the dollar to reach the ¥103-¥105 range before stabilizing. Still, there are risks associated with a much weaker yen that Barclays expects Japanese government officials to consider. “The main risk is that excessive yen weakening may suddenly lead inflation expectations to become unhinged, forcing the [Bank of Japan] to stop its purchase program, bringing excessive instability to the [Japanese government bond] market," Barclays head of foreign-exchange research Jose Wynne said in a quarterly global update. Against the dollar, the euro changed hands at $1.3018, stronger than late Monday's level around $1.2967. Investors later Tuesday will look for a report on euro-zone industrial production in March, as well as Germany's gauge of investor confidence — the ZEW — for May. The German index, which measures investors' expectations for the upcoming six months, may offer upbeat news amid a generally dim growth picture for the euro zone as a whole. Economists expect the ZEW to rise to 40.0 from a month earlier, according to FactSet data. German stocks, as measured by the DAX 30 , have recently climbed to multiyear highs, with better-than-expected data signaling a pickup in activity in Europe's largest economy. The May ZEW reading should benefit in part from the strong rebound in equities, said Crédit Agricole CIB economist Frederik Ducrozet. “Following an unexpected setback in the previous month, we believe there is scope for the German ZEW to surprise to the upside again in the near term, and we look for a leap higher to 45.0 in the headline index this month," he said in a note. In April, the ZEW index fell to 36.3, missing expectations for a 43.0 print. In other currency moves, the Australian dollar remained around 11-month lows, buying 99.69 U.S. cents, a slight improvement from Monday's level around 99.44 U.S. cents. The British pound changed hands at $1.5314, up from $1.5291. Ahram
