The euro sagged on Tuesday to fresh one-year lows against the dollar on bets the European Central Bank will do more to help a wobbly euro zone economy, while the pound fell to a near five-month low versus the greenback on worries about a Scottish secession. The dollar rose against a basket of major currencies, hitting its highest since July 2013. It traded above 105 yen for the first time in eight months on signs of relative strength in the world's biggest economy.
The ECB will hold a policy meeting on Thursday and traders will watch for signs President Mario Draghi is moving towards quantitative easing, which would pump more cash into the economy in a bid to stimulate lending and spending. The euro hit a trough of $1.3110 on trading platform EBS on Tuesday, its lowest since September 2013, before recovering to $1.3128 in early US trading, little changed from Monday's close. The pound fell almost a cent to as low as $1.6510, close to a five-month low of $1.6501.