United States dollar eases from highs on Trump tax plan disappointment

US dollar and Euro notes are seen in this November 7, 2016 picture illustration.

Sterling dipped against the euro on Tuesday, kept under pressure by the single currency's renewed strength as relieved investors turned optimistic on Europe after the first round of the French presidential election.

SINGAPORE (Reuters) - The euro steadied on Tuesday, pausing after a rally sparked by the first-round results of the French presidential election, while the Canadian dollar fell after the US slapped duties on Canadian softwood lumber.

Polls, which were largely accurate in predicting the first round result, have indicated that Macron will comfortably beat euro skeptic nationalist Marine Le Pen in the runoff vote on May 7.

"It will be hard to aggressively buy the euro to levels above $1.10", Okagawa said.

"There has been nothing specific driving the move this morning, we just got up to the $1.0950 area and that did seem like an obvious place to take profit", said the head of currency trading with one large global bank in London, asking not to be named.

Opinion polls indicate that the business-friendly Macron, who has never held elected office, will take at least 61 percent of the vote against Le Pen after two defeated rivals pledged to back him to thwart her eurosceptic, anti-immigrant platform.

The US dollar surged about 2.4 per cent against the Mexican peso to a more than one-month high of 19.2922 pesos and rose as much as 0.4 per cent against the Canadian dollar to C$1.3623 after reports that the United States was readying an executive order to withdraw from the North American Free Trade Agreement (Nafta), a US, Mexico and Canada trade pact.

Sterling surged nearly 2 per cent to hit four-month highs versus the euro after British Prime Minister Theresa May called a snap election last week.

There was little market reaction after media reports said North Korea put on a massive live-fire drill on Tuesday.

"It's too early to say that the dollar will keep trending higher and head above the peak it saw in March", Ino said, referring to the dollar's March 10 high of 115.51 yen.

Market participants have been anxious that North Korea could conduct its sixth nuclear test, or another long-range missile launch, to coincide with the 85th anniversary of the foundation of its army on Tuesday.

"The pound's euphoric rally on last week's snap election news could be at further risk if the market loses confidence in the election's ability to make for easier negotiations with the European Union", analysts from currencies exchange LMAX said.

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