Dollar Near Two-Week High Amid Data-Heavy Week; Fed Rate Cuts Eyed

The dollar hovered near a two-week high against the euro on Tuesday as traders braced for a data-heavy week, including the pivotal U.S. payrolls report. Attention is focused on potential shifts in Federal Reserve interest rate cuts, while economic indicators and currency movements stayed under scrutiny.

The dollar maintained a near two-week high against the euro on Tuesday as traders geared up for a pivotal week of economic data releases, capped by Friday's U.S. payrolls report. The data could substantially influence the Federal Reserve's decision-making regarding interest rate cuts, following Fed Chair Jerome Powell's recent acknowledgment of labor market concerns.

Economists predict an increase of 165,000 U.S. jobs in August, compared to 114,000 in July. Amid these forecasts, job openings data and the jobless claims report, due Wednesday and Thursday respectively, are set to capture investor attention. Reflecting subdued activity, U.S. manufacturing posted slight gains last month, data showed.

With market participants returning from the Labor Day holiday, intraday volatility is anticipated ahead of the jobs report. The CME FedWatch tool points to a 69% chance of a 25 basis points interest rate cut at the Fed's next meeting, contributing to varying impressions across major currencies. Additional factors include the Bank of Japan's policy stance, which has catalyzed a recent yen rally.

(With inputs from agencies.)