At around 1.16pm, the greenback was down 1% against the euro, at US$1.0944, its lowest level since mid-October.

“In my experience, typically, such a sharp move happens because both sides of the blade are moving” in a scissor effect, Marc Chandler of Bannockburn Global Forex told AFP, describing a “growth scare” in the US.

Currency traders are especially worried about the economic impact of the tariffs imposed or threatened by President Donald Trump in recent weeks against several countries including China and US neighbours Canada and Mexico.

Trump doubled down Tuesday on his trade aggression against Ottawa, announcing he was hiking tariffs on Canadian steel and aluminum to 50% from the previous 25%, a move that takes effect Wednesday.

Canadian authorities have vowed to retaliate against any further tariffs.

Economic concerns have swelled since the weekend when Trump told Fox News that the US economy was facing “a period of transition” and declined to rule out a downturn.

Meanwhile, European currencies soared, benefiting over the past week from improving growth prospects on the continent following announcements on defence investments, according to Lee Hardman, an analyst at MUFG.

“The time of illusions is now over,” said EU chief Ursula von der Leyen on Tuesday as she called for a “surge” in European defence spending amid faltering US support in the face of and aggressive Russia.

The rise in value of the single euro currency, as well as other EU currencies, continued in the wake of the European Commission’s plan to “rearm” Europe through the mobilisation of some €800 billion for the continent’s defence.