Dollar Hits One-Month High as Rate Hike Fears Persist

The US dollar has reached a one-month high due to lingering expectations of a rate hike by the Federal Reserve. The dollar index, which tracks the greenback against a basket of currencies including the yen and euro, edged down 0.07% to 101.45 on Tuesday.

A growing number of major brokerages believe there is a real risk of the Fed delivering a rate hike this week, given the surge in oil prices during the month and escalating tensions in the Middle East. Expectations for a rate hike of at least 25 basis points from the Fed at its policy announcement are pegged at 37.9%, according to CME FedWatch.

The dollar's strength is attributed to the lack of meaningful buying at the front end of the Treasury curve, said Chris Weston, head of research at Pepperstone. Investors will also look to US second-quarter GDP data and the Fed's preferred inflation gauge, core PCE inflation, this week for more clues on the health of the world's biggest economy.