The dollar is mixed on Wednesday as markets pause after a sharp drop on Tuesday following the ceasefire between Israel and Iran and fresh comments from U.S. Federal Reserve officials.
The greenback had gained last week on Middle East tensions but weakened this week. Traders are now focused on interest rate expectations and U.S. trade policy developments. Federal Reserve Chair Jerome Powell said in testimony to Congress on Tuesday that inflation may rise this summer but added that, without tariffs, the central bank likely would have continued cutting rates.
His comments were seen as more dovish than last week’s.
Fed officials Michelle Bowman and Christopher Waller also gave signals seen as supportive of rate cuts. Fed funds futures now price in 60 basis points of rate cuts by year-end, with the first move fully expected in September.
Traders are also watching U.S. trade talks ahead of a July 9 deadline set by the Trump administration to finalize agreements that avoid reciprocal tariffs. Markets expect the deadline may be extended to avoid volatility while Congress works on a tax and spending bill.
The euro is steady at $1.1609, near a high not seen since October 2021. Sterling edges up to $1.3619. The Swiss franc trades at 0.806 per dollar after hitting a 10.5-year high Tuesday. The dollar gains 0.49% against the yen to 145.62.
The Bank of Japan signals a cautious stance, citing uncertainty from U.S. tariffs. However, one policymaker said interest rates may still need to rise to address inflation risks.
Bitcoin rises 1.89% to $108,155.
