Dollar regains footing ahead of important Fed remarks

Dollar rose in European trade on Tuesday against a basket of major rivals, holding ground above three-week lows amid active short-covering. 

Investors await a series of remarks by Fed officials later today, looking for clues on the future of US interest rates. 

The current gains are stymied by a recent decline in US 10-year treasury yields to four-week lows, undermining the dollar's standing.  

The Index

The dollar index rose 0.2% to 105.31 today, with a session-low at 105.03, after closing flat on Monday away from three-week lows at 104.52, plumbed earlier in the same session.

US Rates

According to the Fedwatch tool, the odds of a Fed 0.25% interest rate cut in June stand at 10%, while the odds of such a cut in July stand at 32%, and the odds of a similar cut in September stand at 67%.

According to the same tool, investors now expect two interest rate cuts by the Fed this year, likely in September and November. 

US Yields

US 10-year treasury yields fell 0.8% today, extending losses for the fifth straight session and plumbing four-week lows at 4.453%, hurting dollar’s standing. 

New York Fed President John Williams said that at some point, the Fed will cut interest rates, but refused to provide a timeline for that, however he does believe that the US economy is moving towards a better balance.