Dollar Steadies Amid U.S.-China Trade Optimism

The dollar experienced a slight pullback but retained most of its gains due to optimism regarding the trade deal between the U.S. and China. Despite fluctuations against major currencies, broader market sentiment remains positive with diminished hopes of Federal Reserve rate cuts as trade tensions ease.

On Tuesday, the dollar slightly retreated but maintained most of its gains from the previous session. This was driven by optimism over a potential tariff deal between the United States and China, momentarily easing trade tensions between these global economic powerhouses.

Despite a fall against major currencies like the yen and Swiss franc, the dollar remained buoyant, reflecting a long-term trend influenced by global investment strategies. Meanwhile, China's currency, the yuan, reached a six-month high, benefiting from the trade de-escalation.

These developments have led to reduced expectations for Federal Reserve rate cuts as traders anticipate less pressure on policymakers to bolster growth. As markets look ahead, U.S. inflation data is awaited to gauge future monetary policy directions.

(With inputs from agencies.)