Dollar Dominance: Fed Signals Awaited as Global Currencies React

The U.S. dollar rallied for a third consecutive session on Wednesday, gaining ground against the euro and sterling. Traders are keenly anticipating the Federal Reserve's Jackson Hole symposium this week, hoping for insights into future monetary policy directions.

The New Zealand dollar faced significant pressure, plunging as the country's central bank reduced its cash rate by a quarter point to 3.0%, while also hinting at potential further cuts. This dovish move sent ripples across the currency market, signaling investors to brace for additional monetary easing.

All eyes are on Fed Chairman Jerome Powell's impending speech, especially after a recent weaker-than-expected jobs report, although conflicting producer price data clouds the policy forecast. The market is primed for Powell's remarks, which could either affirm or challenge prevailing expectations of a rate cut next month.

(With inputs from agencies.)