The dollar traded near a 2.5-month low against the euro and near a 10-month low against the risk-sensitive Australian dollar on Tuesday as investors increased bets for a Fed rate cut this week and next.

The U.S. dollar traded slightly below its lowest level in more than two months against the British pound, with U.S. President Donald Trump renewing his call for aggressive monetary easing.

Markets are pricing in a rate cut of at least 25 basis points on Wednesday as a certainty, with a 50 basis point cut even more likely. A total of 67 basis points of cuts are expected over the remainder of the year, rising to 81 basis points by the end of January.

In a social media post on Monday, Trump urged Powell to implement a "bigger" rate cut, citing the housing market. Weak labor market data has quickly become a key driver of the increased easing bets in recent weeks, which has weakened the dollar and bond yields while pushing up stock prices, with Wall Street hitting new records on Monday.

There is a "growing view that the Fed is lagging behind and needs to increase the urgency of lowering interest rates to neutral," said Chris Weston, head of research at Pepperstone.

"The market is moving closer to a consensus position that the Fed will cut rates not only at its September meeting, but also in October and December, and possibly in January as well."

The euro was little changed early in the Asian session, trading at $1.1765, not far from last Tuesday's high of $1.1780, a level not seen since July 28.

Sterling was steady at $1.3605 after reaching $1.3621 in the previous session for the first time since July 8.

The Australian dollar held firm at $0.6672, just below Monday's high of $0.6674, its highest level since November 8.

The US dollar was unchanged at 147.42 yen.

Source: Reuters