The US dollar strengthened slightly on Tuesday, rebounding from a one-month low ahead of Fed Chairman Jerome Powell's testimony to the Senate. On the other hand, the euro currency continues to survive amid the uncertain French political atmosphere.
The US Dollar Index, which measures the US dollar against six major currencies, traded up 0.1% to 104.745, slightly above the overnight low of 104.622.
The US Dollar has strengthened slightly on Tuesday, but remains on the defensive after Friday's weak jobs report and ahead of two days of Chairman Powell's testimony before Congress, which begins later today with the Senate and is followed by the House of Representatives on Wednesday.
Confidence is growing that the Fed will approve its first rate cut of the cycle in September, with traders now seeing a roughly 76% chance of such a rate cut, up from 66% a week ago, according to CME Group's FedWatch tool (
There will be more clues about the likely path of US interest rates this week, with the release of key consumer inflation data on Thursday.
On the other hand, the Euro fell slightly against the US dollar to trade at 1.0819, not far from Monday's nearly four-week peak of 1.0845. The single currency also fell as low as 1.0791 on the same day in volatile trade.
Traders were still trying to digest the implications of Sunday's second round of parliamentary elections in France, with the country now facing a hung parliament and difficult negotiations to form a government.
A hung parliament in France could complicate policymaking, S&P Global said on Monday, warning that more debt or a continued decline in economic growth could trigger a downgrade.
Credit rating agencies downgraded France at the end of May.
The GBP currency was trading almost unchanged at 1.2805 against the US dollar, after strengthening as high as 1.2845 on Monday, its strongest since June 12.
Bank of England policymaker Jonathan Haskel said that day he wanted to keep interest rates on hold because inflationary pressures remained in the job market. The Bank of England is expected to meet in early August.
