Dollar Holds Firm as Markets Eye Fed's Rate Cut Signals

The dollar continued its upward trend on Tuesday as investors eagerly awaited potential signals from the Federal Reserve regarding future rate cuts expected later in the week.

While the yen minimized losses spurred by disappointing Japanese economic figures, the Australian dollar saw a slight dip following insights from the Reserve Bank of Australia's recent meeting. With the Lunar New Year and U.S. President's Day holidays thinning trade in Asia, crucial economic indicators, including minutes from the Fed's latest meeting and preliminary U.S. GDP figures, are due later in the week.

Senior currency strategist Kristina Clifton from the Commonwealth Bank of Australia expressed optimism about the U.S. economy, predicting a possible rate cut in June, followed by another in July, diverging from broader market expectations. As various global economies released their inflation data, the dollar index remained stable, building on previous gains.