US Dollar Weakens on Treasury's Long-Term Bond Purchase Increase

The US dollar declined against major currencies on Tuesday after the Treasury Department announced an increase in its long-term bond purchases. The move shifts the supply-demand balance in the bond market, reducing upward pressure on yields and weighing on the greenback.

The ICE Dollar Index fell 0.3% to 103.2, with the euro rising to $1.0850 and the British pound climbing to $1.2700. The dollar slipped to 149.80 against the yen as Japanese officials monitored the currency for potential intervention.

Currency markets are highly sensitive to shifts in relative interest rate expectations. The Treasury's move is being viewed as a signal that the government is willing to lock in longer-term borrowing costs, easing pressure on the Federal Reserve to keep policy tight.