Dollar wavers as rate hike prospects fade

The US dollar settled near its lowest levels in several months against most major currencies on Tuesday, as expectations for near-term monetary policy tightening receded, but sentiment remained fragile due to the growing threat of escalation in the Middle East war.

The euro traded at $1.1581 during early Asian sessions, remaining close to its two-month high of $1.1614 touched on Monday.

The British pound reached $1.3548, staying near its three-month high recorded in the previous session.

Data from last week showed US retail sales fell in July for the first time in nine months, following unexpected job losses in the previous month.

CME Group’s FedWatch tool indicated that traders see a 35% probability of the Federal Reserve raising interest rates in September, down from 52.2% a week ago.

The Japanese yen remained just below the 160 level against the dollar, shifting attention to the Bank of Japan’s meeting scheduled for next month. In the latest trading, the yen stood at 159.46 against the dollar. The Australian dollar rose 0.11% to $0.71119, staying near its highest levels since early June, while the New Zealand dollar traded at $0.5902 against the US currency.