U.S. dollar rallies on contrasting central bank views

Reuters (10/7) - The U.S. dollar rallied to three-year highs against major currencies on Tuesday, extending a bullish run on expectations the Federal Reserve will reduce stimulus at a time when other major central banks are likely to ease further. The euro hit a three-month low against the dollar after Standard & Poor's cut Italy's sovereign credit rating and European Central Bank policymaker Joerg Asmussen told Reuters Insider that the bank's guidance on interest rates staying at record lows extends beyond 12 months. The dollar index .DXY, which measures the greenback against a basket of six currencies, rose as high as 84.753, the strongest since July 2010. It last traded at 84.631, up 0.5 percent on the day. The euro fell as low as $1.2754, according to Reuters data, its lowest since early April. It last traded down 0.7 percent at $1.2781.