Investing.com - The dollar remained close to three-month highs against the euro on Tuesday as concerns over a controversial bailout deal for Cyprus continued to support safe haven demand. During European late morning trade, the dollar was trading within striking distance of three-month highs against the euro, with EUR/USD slipping 0.08% to 1.2947. The euro pulled away from session lows after data showed that the ZEW index of German economic sentiment ticked up to 48.5 in March from February’s reading of 48.2. However, the ZEW index of euro zone economic sentiment declined to 33.4 in March from a reading of 42.4 in February, amid concerns over political uncertainty in Italy and fears over the rescue package for Cyprus. The euro remained under pressure amid concerns that the parliament in Cyprus could reject a bill on a bank deposit tax needed for the country to secure a bailout. Earlier Tuesday, Cyprus’s government submitted a new deposit tax bill that would scrap the tax on bank deposits below EUR20, 000. The dollar pushed higher against the yen, with USD/JPY easing up 0.12% to 95.33. Investors were looking ahead to the outcome of the Federal Reserve’s policy meeting on Wednesday after data last week showing that U.S. inflation was contained left the way clear for the bank to continue its asset purchase program. The Bank of Japan was to come under new leadership on Wednesday, amid expectations for more aggressive easing measures at the bank’s next policy meeting in April. The greenback slipped lower against the pound, with GBP/USD easing up 0.11% to 1.5124. In the U.K., official data showed that consumer price inflation ticked up to a nine-month high of 2.8% in February, with higher energy prices adding to the cost of living. The dollar was also slightly lower against the Swiss franc, with USD/CHF sliding 0.14% to 0.9446. The greenback was broadly higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD up 0.13% to 1.0230, AUD/USD sliding 0.19% to 1.0379 and NZD/USD losing 0.34% to trade at 0.8235. Earlier Tuesday, the minutes of the Reserve Bank of Australia’s March meeting indicated that the bank can still cut rates if needed. "While further reductions may be required, on the information currently to hand it was appropriate to hold rates steady," the minutes said. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, edged up 0.03% to 82.89. The U.S. was to release official data on building permits and housing starts later in the trading day.

Source