TOKYO- The dollar hovered near a one-month peak against the euro and pushed to a one-week high versus the yen on Tuesday as traders braced for crucial US inflation data and fresh Federal Reserve interest rate forecasts the following day.
The US currency was supported by higher Treasury yields in the aftermath of surprisingly robust domestic jobs data at the end of last week, which triggered a dramatic paring of bets for Fed rate cuts this year.
The Bank of Japan sets policy on Friday, and while investors expect a reduction in the central bank’s monthly government bond purchases as early as this meeting, gaping yield differentials with the US have kept the yen on the defensive.
The dollar added 0.15 percent to stand at 157.275 yen after earlier touching its highest since June 3 at 157.335.
The euro was flat at $1.076825 It slid to as low as $1.0733 on Monday, a level last seen on May 9, after gains by the far right in European Parliament elections spurred French President Emmanuel Macron to call a snap election.
Sterling was steady at $1.27355 ahead of labor data later in the day that is forecast to show a slowing in the decline in UK employment.
The US dollar index which measures the currency against the euro, sterling, yen and three other major peers, was little changed at 105.12, after reaching 105.39 on Monday for the first time since May 14.
Economists polled by Reuters expect headline US consumer price inflation to ease to 0.1 percent from 0.3 percent last month, and core price pressures to remain steady on the month at 0.3 percent .
No policy change is expected at the conclusion of the Fed’s two-day policy meeting ending Wednesday, but officials will update their economic and interest rate projections.
