The USD index managed to hold above the psychological barrier at 100 during early trades, after Evans' comments confirming the fact that Federal Reserve will not accelerate the rate hike.
The dollar was supported by comments by Federal Reserve Bank of Chicago president Charles Evans, who said the Federal Reserve is on track to raise interest rates twice this year. He is a member of the Federal Open Committee who votes on monetary policy, Evans added further rate hikes would be likely if inflation pick up.
After yesterday's comments, we are waiting a number of FOMC members, most notably Federal Reserve Bank of New York president Williams Dudley. And Federal Reserve Bank of Kansas president Esther George, Federal Reserve Chairman Loretta Meester, and Boston Fed Chairman Eric Rosengren later on Tuesday.
Before Federal Reserve Chairman Janet Yellen comments on Thursday, which should calm and reassure markets about the future of monetary policy.
At 04:10 GMT, the US Dollar Index(USDIX) fell 0.06% to trade at 100.09.
The Federal Reserve last week raised interest rates benchmark as expected and pledged to gradually raise interest rates, which financial markets have seen it disappointing after hopes of raising interest rates more than three times in 2017.
The pound is waiting for inflation data
The pound fell against the dollar after the UK signaled the formal launching separation proceedings with the European Union on March 29, coinciding with the 60th anniversary of the European Union's Treaty of Rome. At the weekend, European Commission President Jean Claude Juncker, told the EU that no other nations will leave as they will see how difficult the process will be.
The pound has been trading since the morning near the opening price of 1.2367 against the dollar
On the economic calendar, we are now looking on inflation data, led by the February consumer price index, which is expected to show a marked acceleration, to meet the inflation target of 2%. Inflation will give the Bank of England the green light to start tightening monetary policy.
Rising inflation supports the bank's drive to start raising interest rates, which is what we actually started to see from the bank after Christine Forbes, a member of the Monetary Policy Committee last week, voted to raise interest rates.
Higher than expected British inflation will give the pound the strength to rally higher, but if the reading comes in or below expectations, this will renew negative pressure on the pound.
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