U.S. Dollar Strengthens Amid Fed's Interest Rate Decisions

The U.S. dollar bolstered against major currencies following Federal Reserve Chair Jerome Powell's comments on interest rate policies. As traders assessed Japan's new prime minister and an upsurge in Australian retail sales, market responses varied. Analysts predict further moderate rate cuts, impacting global currency dynamics.

The U.S. dollar edged higher against major currencies on Tuesday following remarks by Federal Reserve Chair Jerome Powell, who dismissed hopes for aggressive interest rate cuts. The yen remained stable amidst Japan's political changes, and Australia's dollar climbed on the back of positive retail data.

Powell's hawkish comments at a Tennessee conference indicated the Federal Reserve's preference for moderate, quarter-point interest rate cuts moving forward. Traders adjusted expectations, reducing the likelihood of a 50-basis-point cut at the next policy meeting from 53.3% to 35.4%.

Economic data, including the Institute for Supply Management's reports and upcoming jobs figures, could further influence the dollar. Meanwhile, Japan's incoming Prime Minister, Shigeru Ishiba, a noted monetary policy hawk, adds an element of uncertainty. The euro and Australian dollar experienced varied movements in response to regional economic signals.

(With inputs from agencies.)