The US dollar fell to a seven-month low ahead of a testimony before Congress from former FBI director James Comey later in the week.
An index that measures the US currency’s strength against a host of other currencies was trading at its lowest level since November overnight into Tuesday.
The dollar also fell to a near six-week low against Japan’s yen and slipped against the euro.
Mr Comey on Thursday reportedly plans to testify to exchanges in which Donald Trump pressured him to abandon an investigation into the former National Security Advisor, Mike Flynn, who was sacked for not disclosing conversations with Russian officials.
There had been speculation the US President would seek to invoke executive privilege to prevent Mr Comey from testifying.
Elsewhere in financial markets on Tuesday, oil prices continued to slide, pressured by geopolitical tensions in the Middle East after leading Arab power cut ties with Qatar on Monday.
Investors said that there were fears the spat could undermine efforts by oil cartel Opec to tighten markets.
Citing analysts, Reuters reported that the current dispute is much more significant than a similar one in 2014.
"The measures by the anti-Qatar alliance signal commitment to forcing a complete change in Qatari policy or creating an environment for leadership change in Doha ... Saudi Arabia and its allies will not accept any solution short of (Qatari) capitulation," political risk consultancy Eurasia Group said in a note, according to the agency.
Early Tuesday, Brent crude was trading just over $49, which is down around 9 per cent from the open of futures trading on 25 May, the day an Opec-led policy to cut oil output was extended into the first quarter of next year.
Additional reporting by Reuters
