The market was on alert at the opening of trading earlier this week with attention being focused on the progress of trade negotiations between the United States (US) and Europe.
President Donald Trump sparked new concerns with the threat of 50% tariffs on Europe which was supposed to start on June 1.
Tensions, however, eased slightly when Trump held discussions with European Commission President Ursula von der Leyen who asked for time to reach an agreement.
Trump set July 9 as the deadline for a trade agreement with Europe.
In addition to the threat of 50% tariffs on imported goods from the European Union (EU) starting June 1, Trump is also considering a 25% tariff on all Apple iPhone products manufactured outside the United States.
Market sentiment, which is considered quite risky at the moment, expects the US dollar to continue to decline at the end of May.
Last week, the continued depreciation of the US dollar opened up space for other major currencies to strengthen.
Among the notable gains was the Pound, supported by strong UK retail sales data published last Friday.
The Pound managed to surge to a fresh 3-year high against the US dollar, surpassing the $1.3500 price level.
The Euro rose slowly, but managed to maintain momentum at the opening session earlier this week.
The Canadian Dollar also stole the spotlight with further strengthening to a 7-month high against the US dollar, almost reaching $1.3700 on the USD/CAD chart.
The Australian Dollar managed to perform well against the US dollar despite the central bank cutting interest rates at its latest monetary policy meeting last week.
Meanwhile, the Yen gradually rose against the US dollar despite the currently reported shaky Japanese economic situation.
