The greenback touched a peak on hopes of easiness on rate cut
The greenback hit a new 2.5-month high, extending its upward trend as predictions mountain that the Fed will moderate its plans for interest rate cuts.
The dollar has gained for three consecutive weeks and is poised for its 15th increase in 17 sessions, fueled by a series of encouraging economic reports that have reduced expectations for the magnitude and pace of rate cuts from the Fed. This shift has also led to a rise in U.S. Treasury yields.
Markets now see an 89.6% likelihood of a 25 basis point cut at the Fed's November meeting, with a 10.4% chance of rates staying the same, according to CME's FedWatch Tool.
The dollar index that gauges the greenback versus its major pairs added 0.12% to 104.08, after touching a peak of 104.10 the highest since the 2nd of August. The index has risen approximately 3.3% this month, set to achieve its best monthly performance since April 2022.
EUR/USD slumped 0.15% to $1.0798.
On Tuesday, several ECB policymakers addressed concerns about the risk of inflation dropping below the bank's 2% target, indicating a shift in their focus after years of high price increases.
GBP/USD dipped 0.04% to $1.2979.
USD/JPY ticked up by 0.17% to 151.08 after advancing 151.19, its peak since July 31.
According to Jiji Press on Tuesday, Bank of Japan Executive Director Takeshi Kato stated that the bank is closely monitoring the potential risks from rising import prices due to the weakening yen.
