Investors digested Credit Suisse's bailout and focused on U.S. regional banks, sending the dollar to a more than one-month low

On Tuesday (March 21), the low of the US dollar index fluctuated in a narrow range at the beginning of the Asian market, and it is currently trading around 103.34. The dollar fell 0.4% on Monday and hit a fresh intraday low of 103.27 since February 15, as market concerns cooled after UBS bought its struggling rival Credit Suisse at a low price, hitting the safe-haven demand of the dollar.

UBS agreed on Sunday to buy Credit Suisse for 3 billion Swiss francs ($3.23 billion) and take on losses of up to $5.40 billion in a forced merger orchestrated by Swiss authorities.

The dollar index fell 0.41% late on Monday to close at 103.31, the day after the merger was announced.

"I think the dollar takes a hit every time people feel you don't have to do a safe haven trade," said Thomas Anderson, managing director of Moneycorp North America.

Although several large banks deposited $30 billion in funds with First Republic last week, concerns about regional banks still weighed on the dollar, with investors most concerned about First Republic, whose shares plunged as much as 50% on Monday and were down about 39% in late trading.

"In particular, there is developing risk, or at least some degree of uncertainty, for regional banks in the US, and I think that will weigh on US assets at that point as well," said Bipan Rai, head of North American FX strategy at CIBC Capital Markets in Toronto.

Under the UBS-Credit Suisse deal, an additional $17 billion of Credit Suisse's AT1 bonds will be fully written down. This has angered some debt holders, who believe they will be better protected than shareholders, and unnerved investors in other banks' AT1 bonds.

The euro rose 0.28% against the dollar on Monday to close at $1.016; the pound against the dollar on Monday to close at $1.2268, up 0.76% on the day, and once hit a new high of nearly a month and a half to 1.2284%. The market generally expects the European Central Bank to raise interest rates by 25 basis points this week.

The dollar rose 0.26% to 0.9283 against the Swiss franc on Monday.

The Federal Reserve's latest decision on rate hikes will be released on Wednesday, adding a layer of uncertainty for investors.

The Federal Reserve's target range for the federal funds rate is currently 4.5% -4.75%. Traders now expect rates to peak around 4.8% in May, followed by a steady series of rate cuts heading into the end of the year, but they will be keeping a close eye on the Fed's forecast for future rate movements, which is expected to be released on Wednesday.

"The least regrettable path, at least in our view, is to keep [the forecast] in line with the December forecast," said Mr. Rai. "Now that risks in the domestic financial sector have risen, I think that could be their prudent course of action."

The yen, long seen as a haven in times of stress, bottomed out against the yen on Monday, falling as low as 130.54 earlier before recovering to around 131.30 in late trading, down about 00.38 per cent.

The Australian dollar rose 0.27% to $0.6715 against the dollar on Monday. The dollar fell about 0.6% against the Canadian dollar on Monday to close at 1.3654, its lowest close in nearly two weeks.

Key economic data and risk events on Tuesday