Dollar Dips to New Lows Amid Rate Cut Bets

The dollar hit a four-year trough against the euro on Tuesday, as investors brace for a Federal Reserve rate cut this week. The dollar index, which tracks the currency against six major peers, fell to its lowest since July. Factors driving this move include renewed pressure from anticipated Fed easing and rising speculation of aggressive monetary policies, signaled by President Trump's recent remarks.

Market watchers expect a 25-basis-point rate cut on Wednesday, with U.S. labor market data casting a significant influence. Karl Schamotta, Corpay's chief market strategist, notes a dovish tone is expected from the Fed, focusing on labor market support over inflation fears, potentially leading to more cuts. Meanwhile, despite robust retail data, concerns about growth persist amid tariff-induced price pressures.

In Europe, the euro advanced as industrial production data indicated resilience, and German investor optimism unexpectedly rose. Sterling saw gains as the UK's job market slowed, easing inflation worries. Against the yen, the dollar weakened ahead of the Bank of Japan meeting. Cryptocurrencies, including bitcoin, dipped, extending losing streaks.