Dollar Near Seven-Month Low Amid Federal Reserve Rate Cut Speculations

The dollar hovered near a seven-month low due to speculations that the U.S. Federal Reserve might cut interest rates next month. This benefited other currencies like the euro and sterling. Federal Reserve Chair Jerome Powell’s upcoming speech is expected to provide clues on future rate cuts.

The dollar hovered near a seven-month low on Tuesday, driven by speculations that the U.S. central bank will cut interest rates next month. Traders await comments from Federal Reserve Chair Jerome Powell on Friday, which could provide more clarity on this issue.

The dollar's weakness has lifted other major currencies, with the euro reaching its highest point this year and the pound nearing a one-month peak. The Japanese yen also gained slightly, trading at 146.50 per dollar, close to its two-week high from the previous session.

Investor focus will primarily be on Powell's upcoming speech in Jackson Hole. Market participants expect Powell to address the potential for a rate cut, dissecting his words for indications of either a 25 basis point or 50 basis point reduction in September.

(With inputs from agencies.)