U.S. Dollar Drops On Biden's Tax Proposal

The U.S. dollar fell against its major counterparts in the Asian session on Friday, as investors reacted to President Joe Biden's capital gains tax proposal to fund education and other spending plans in an attempt to overhaul the economy.

The Biden administration is planning to hike the capital gains tax to 39.6 percent from 20 percent for those earning $1 million or more, media reports showed.

The administration is expected to release the proposal next week as part of the tax increase to fund social spending in the upcoming "American Families Plan" worth around $1 trillion.

The Fed meeting is due next week, although no major policy changes are expected. Traders will be paying close attention to any hints about the chance of scaling back monetary easing in the future.

U.S. new home sales data for March will be published later in the day. New home sales are forecast to climb by 14.3 percent to an annual rate of 886,000 in March after plummeting by 18.2 percent to a rate of 775,000 in February.

The greenback reached as low as 107.80 against the yen, its lowest level since March 4. If the dollar falls further, it may challenge support around the 106.00 level.

The greenback edged down to 0.9159 against the franc and 1.2042 against the euro, from Thursday's closing values of 0.9166 and 1.2015, respectively. The greenback is likely to find support around 1.22 against the franc and 0.90 against the euro.

The greenback that ended yesterday's trading at 1.3838 against the pound fell to 1.3883. The greenback is poised to challenge support around the 1.41 region.

The greenback slipped to 0.7183 against the kiwi and 0.7739 against the aussie, after rising to 0.7151 and 0.7695, respectively in early deals. The greenback is seen finding support around 0.74 against the kiwi and 0.80 against the aussie.

The greenback was down against the loonie, at a 2-day low of 1.2471. On the downside, 1.21 is possibly seen as its next support level.

Looking ahead, PMI reports from major European economies are due in the European session.

In the New York session, U.S. new home sales for March are scheduled for release.

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