Dollar Gains as Fed Chair Powell Pushes Back Against Large Rate Cuts

The U.S. dollar strengthened against major currencies after Federal Reserve Chair Jerome Powell signaled a slower pace of rate cuts. Meanwhile, the euro neared a one-week low due to reduced German inflation, and the yen fluctuated amid Japan's political shifts. Australia's dollar steadied after gains linked to Chinese stimulus efforts.

The U.S. dollar gained ground against major currencies on Tuesday following Federal Reserve Chair Jerome Powell's remarks downplaying the likelihood of more aggressive interest rate cuts.

The euro hovered near its recent one-week low as German inflation dropped to its lowest level since early 2021, fueling speculation of another rate cut this month. In Japan, the yen stabilized against the dollar, following a tumultuous period impacted by the appointment of incoming Prime Minister Shigeru Ishiba.

Australia's dollar steadied after reaching a high not seen since February of last year, buoyed by economic stimulus efforts from China, its largest trading partner. Powell's comments emphasized the U.S. central bank's cautious approach to further rate reductions while traders remain certain of another cut in November. The dollar index edged up slightly, continuing its recent gains.

(With inputs from agencies.)