The dollar hovered near a three-week high on Tuesday, as expectations policymakers around the world would unleash fresh stimulus drove an improvement in appetite for riskier assets and lifted U.S. government bond yields.
The dollar is higher across the board, tracking the rebound in yields. The prospect of Germany embarking on stimulus was the turning point and the dollar has regained momentum since.
Market focus will shift to the annual symposium of global central bankers starting on Friday at Jackson Hole, Wyoming.
Particular attention will center on Fed Chairman Jerome Powell's comments on monetary policy at a time when investors widely expect the Fed to cut rates again at its next meeting in September.
A series of further rate cuts by the Fed has already been priced into the dollar. So the currency could gain a fresh boost if Powell does not sound as dovish as expected and clouds rate cut prospects.
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