The dollar index held steady around 109.6 on Tuesday, near a more than two-year high hit in the previous session. Signs of continued resilience in the U.S. economy prompted traders to scale back expectations for a Federal Reserve interest rate cut this year. Investors are also bracing for key inflation data this week, which could further influence the outlook for interest rates.

Markets are now pricing in just 29 basis points of easing this year, a sharp drop from the 50 basis points forecast earlier this month. A quarter-point rate cut that was expected is now likely to be delayed until the second half of the year. The dollar also found support from the Trump administration's upcoming tariff threats, although reports suggested a gradual approach to tariffs may be adopted. While the dollar held firm against most major currencies, it weakened slightly against the Australian and New Zealand dollars. (AL)

Source: Trading Economics