By Peter Nurse
Investing.com – The U.S. dollar slipped lower in early European trade Tuesday, handing back some of the previous session’s gains amid uncertainty over the future path of the Federal Reserve’s rate-hiking cycle.
At 03:05 ET (07:05 GMT), the , which tracks the greenback against a basket of six other currencies, traded 0.2% lower to 102.013, having risen 0.4% last session, bouncing off a two-month low last week.
Friday’s official jobs report, released on the Good Friday holiday, had given the greenback a boost as it showed a resilient labor market, with increasing by 236,000 jobs last month, pushing the down to 3.5%.
This strength suggests the has room to continue lifting interest rates when its policymakers next meet in May, but contrasts with the weaker data released earlier last week that showed U.S. dropped to their lowest in nearly two years in February.
that the Fed will lift interest rates by another quarter point in May now stand at around 70%, up from around 50% last week.
This brings the focus squarely on to Wednesday’s data as well as the of the Fed’s March meeting as traders look for further clues of the future path of monetary policy.
traded 0.3% higher at 1.0892, after Monday’s 0.3% retreat.
Data due for release later Tuesday are expected to show that in the euro region fell 0.8% on the month in February as consumers struggled with high prices.
in the euro zone is likely to stay high for the rest of 2023, ECB policymaker Pablo Hernandez de Cos said on Monday, suggesting that the is still widely expected to continue hiking interest rates when it next meets in May.
“Despite the building macro negatives for the dollar, we suspect a challenging risk environment can keep EUR/USD bouncing around in a 1.05-1.10 range,” said analysts at ING, in a note.
rose 0.3% to 1.2414, having declined 0.2% overnight, while the risk-sensitive rose 0.5% to 0.6670.
fell 0.1% to 133.41, after rising over 1% on Monday when new Bank of Japan Governor Kazuo Ueda vowed to stick with ultra-easy stimulus settings at his inauguration.
rose 0.1% to 6.8851 after data showed inflation in the country missed expectations in March, while inflation continued to fall.
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