The US dollar steadied on Tuesday after posting strong gains in recent weeks, as traders adopted a cautious stance ahead of a batch of economic indicators that could shape Federal Reserve policy.
The dollar index, which measures the greenback against a basket of six major currencies, was little changed at 108.3. The index has surged over 18% this year, driven by the Fed's aggressive rate hiking campaign and safe-haven flows amid global recession fears.
Sterling and the euro edged higher but moves were limited. The pound traded around $1.1240 after hitting a 37-year low last week, while the euro changed hands near $0.9900.
Investors turned their attention to key US data points this week that will provide more clarity on the state of the economy. Personal consumption expenditures inflation on Thursday is the Fed's preferred gauge and seen as important for the monetary policy outlook.
Nonfarm payrolls and unemployment figures are also due on Friday. The reports could influence expectations around how high the Fed may take interest rates and the potential for a policy pivot next year.
The yen was little moved against the dollar, holding around 146 yen levels. Japan intervened in markets last month to support its currency when the dollar pair approached 145 yen. Further Japanese intervention is eyed if the yen extends losses.
Overall, traders adopted a wait-and-see attitude ahead of the all-important US data, although the dollar remains underpinned by Fed tightening bets and safe-haven demand given fading global growth prospects. Its next moves may depend on any surprises in the coming economic reports.
