Investing.com – The U.S. dollar traded in a tight range on Tuesday, stabilizing as traders looked for more clues about the expected timing and extent of Federal Reserve rate cuts this year.
At 04:30 ET (0830 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading little changed at 104.475.
Dollar range limited ahead of Fed speeches
The dollar was mostly steady on Tuesday but edged higher this week after several Fed officials called for continued caution even after data last week showed pressure on consumer prices easing in April.
The vice chairman said on Monday it was too early to say whether the slowdown was “prolonged,” and the vice chairman noted that restrictive policies were taking longer, dampening hopes of a speedy contraction.
There are more Fed speakers on Tuesday, including Barr, as well as members of the FOMC and .
“Expectations for overall Fed policy easing by year-end have been moderated to 42bps, but we suspect the next major move in OIS pricing will not occur until the main US PCE on May 31,” ING analysts said in a note.
“Our view on the dollar over the coming days remains neutral, although risks appear to be slightly skewed to the upside.”
Euro calm as German producer price index falls sharply
In Europe, shares traded 0.1% higher at 1.0861, barely moving after falling more than expected in April, falling 3.3% year-on-year, mainly due to reduction in energy prices.
Excluding energy prices, German producer prices were 0.6% lower than in April 2023.
Inflation in the eurozone’s largest economy is falling, which should help ECB officials agree to an interest rate cut in June.
“We do not expect major fluctuations today as data calendars in the eurozone and the US are light,” ING added. “European Central Bank President Christine Lagarde’s speech today at an event honoring Janet Yellen may not address monetary policy at all.”
rose to 1.2709, trading in a tight range ahead of Wednesday’s release of UK consumer price index data for April, with annual inflation expected to slow sharply to near the Bank of England’s 2% target.
Yuan and yen remain weak
In Asia, shares traded 0.1% higher at 7.2371, remaining near a six-month high after the People’s Bank kept its benchmark lending rate unchanged at a record low earlier in the week.
fell 0.1% to 156.17, with the Japanese yen still weak in the face of persistent pressure from US interest rates, while uncertainty over the Bank of Japan’s plans to begin tightening also presents a grim outlook.