The U.S. dollar fell to its lowest level in two and a half months. Investors are betting that rising inflation could erode the value of the currency.

Rising inflation forecasts in recent years have favored the dollar, as investors assumed that interest rates would be raised in response to rising prices. A disappointing jobs report last week triggered a widespread decline in the greenback, and while soaring commodity prices have raised fears of rising inflation in the coming months, markets believe the U.S. Federal Reserve will keep rates low and continue to buy assets.

The dollar fell to 89.94, its lowest level since February 25. The Canadian currency hit a new four-year high on Tuesday and stabilized near that level in New York trade, remaining roughly flat on the day at 1.21 Canadian dollars. The pound remains one of the strongest currencies.