The euro rose from a 16-month low on Tuesday as a halt in the dollar's rally prompted some investors to buy the single currency, but fears over Italian budget proposals and Britain's exit negotiations with the EU are likely to dampen gains.

 

Tuesday is the deadline for Italy to return its budget proposals to the European Union after a standoff between Rome and Brussels over government spending plans caused turbulence in bond markets and pushed the European currency.

 

Progress in negotiations for Britain's secession from the EU is another source of uncertainty about the euro and the pound sterling. Prime Minister Teresa Mae said on Monday there were still major unresolved issues as the two sides approached the finish line in Britain's exit negotiations.

 

Against the dollar, the euro rose 0.1 percent to $ 1.1229, beating the low of $ 1.1216 hit in June 2017. The single currency has fallen about 7 percent since the beginning of this year, losing more than half of last year's gains.

 

The dollar's rally halted overnight, with the US currency index easing slightly to 97.628. The index hit 97.70 in the previous session, its highest level since June 2017.

 

The Japanese Yen was trading at 113.99 on Tuesday, with the greenback gaining 0.1% against the Japanese currency. The yen touched a three-week low of 114.20 yen on Monday.