The dollar decreased, reaching its lowest level in two months on Tuesday, after officials from the Federal Reserve indicated that the tightening cycle is nearing its end. Meanwhile, the pound rose to its highest level in 15 months following stronger-than-expected wage growth in the UK.
Several Federal Reserve officials stated on Monday that the bank is likely to need to raise interest rates again to curb inflation, but they added that the tightening cycle is approaching its end.
These statements led to the dollar's decline to its lowest level in two months, against a basket of currencies at 101.67, as traders lowered their expectations regarding the extent of additional rate hikes needed.
Expectations for U.S. interest rate movements have become a key driver for the dollar since the central bank began its tightening cycle last year. The markets are now focused on U.S. consumer price data, scheduled for release on Wednesday, which will clarify the progress the Federal Reserve has made in its battle against rampant inflation.
The pound rose to its highest levels in 15 months at 1.2913 dollars after wage growth in the UK recorded a new record, increasing pressure on the Bank of England to take further tightening measures to control inflation.
The yen was among the biggest gainers, rising about 0.6%, falling below the 141 yen per dollar mark for the first time in about a month. In the latest transactions, it was at 140.455 yen per dollar.
The euro increased by 0.1% to 1.1012 dollars, while the Australian dollar remained stable at 0.6680 dollars, and the New Zealand dollar dropped by 0.2% to 0.6198 dollars.
The Chinese yuan strengthened in offshore trading, reaching 7.2055 against the dollar in the latest transactions, boosted by improved sentiment due to the extension of the Chinese central bank's support for the struggling real estate sector.
