

Market Analysis
The U.S. dollar fell on Tuesday, nearing seven-month lows amid increasing expectations that the Federal Reserve will reduce interest rates in September.
At 04:00 ET (09:00 GMT), the Dollar Index, which measures the greenback against a basket of six major currencies, was down 0.3% at 101.667, close to its lowest level since early January.
Dollar Weakens on Fed Rate Cut Speculation
The dollar has dropped over 2% in the past month, following U.S. Treasury yields lower as optimism grows that the Federal Reserve will cut interest rates in September. Fed Chair Jerome Powell is scheduled to speak at the Jackson Hole symposium on Friday, with traders eager for insights into the timing and magnitude of potential rate cuts.
Evercore ISI commented, "We expect Powell’s remarks to be reassuring and consistent with a baseline of a series of 25 basis-point cuts, but he may indicate that the Fed is open to 50 basis-point cuts if needed. However, we do not anticipate a definitive indication on whether the first move will be 25 or 50 basis points." They added that Powell's guidance will likely depend on upcoming labor data.
The Fed has kept its benchmark overnight interest rate at 5.25%-5.50% since July of last year. Traders are currently anticipating a 25-basis-point rate cut in September, with a 24.5% chance of a 50 basis-point reduction.
EUR/USD Hits Highest Level of the Year
In Europe, EUR/USD remained steady at 1.1086, with the euro reaching its highest point this year due to the weaker dollar. The euro has risen about 2% this month and is on track for its best monthly performance since November.
The eurozone consumer price index was confirmed to be flat for July, with a 2.6% annual increase, indicating that inflation pressures are still subdued.
GBP/USD rose 0.2% to 1.3009, reaching a one-month high as the pound gained from dollar weakness. Traders are divided on the likelihood of another rate cut by the Bank of England next month, following its recent decision to start a rate-cutting cycle.
Yen Holds Steady Ahead of Ueda’s Speech
In Asia, USD/JPY fell 0.1% to 146.35, remaining close to the previous session’s near two-week high but still well above the seven-month low of 141.67 reached earlier in August. Attention is focused on Bank of Japan Governor Kazuo Ueda, who will address parliament on Friday. Investors will be watching to see if Ueda maintains his recent hawkish stance following the BOJ’s rate hike last month.
USD/CNY was unchanged at 7.1395, receiving little support from the People’s Bank of China’s decision to keep its benchmark loan prime rate steady as expected. This decision followed an unexpected cut in July aimed at stimulating economic growth.
Paraphrasing text from "Reuters" all rights reserved by the original author.