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The dollar hobbled near a three-year trough against a currency basket on Tuesday, undermined by loose U.S. monetary policy, but analysts said it's fall was looking overextended due to extreme short positioning.
The dollar slipped to a record low against the Swiss franc at Chf0.8619 in early trade, slipping under Friday's low of Chf0.8626.
"It's very much a case of buying the dips in euro/dollar at these levels. Rate hike expectations are anchoring the euro," said Chris Walker, currency strategist at UBS.
The single currency hit a 17-month high of $1.4903 on Monday.
Sterling fell to its lowest level since March 2010 against the euro after a survey of UK manufacturing came in below market expectations.
"Core UK data has begun to disappoint to the downside. It seems like all bets are off for a UK rate hike until year-end," said Walker at UBS.
The Canadian dollar staged a brief relief rally as Canada's ruling Conservatives won a crushing victory in the federal election. Provisional results showed the Conservatives had 166 seats in Parliament, well above the 155 they needed to transform their minority government into a majority.
The Australian dollar dipped after Australia's central bank kept interest rates unchanged at 4.75% as expected. The Reserve Bank of Australia said underlying inflation looked to have bottomed and would increase somewhat as the economy strengthened, sounding a little less hawkish than some analysts had expected.
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