Anna 
In early European trade on Wednesday, the U.S. dollar made slight gains, propelled by growing anticipations that the Federal Reserve will postpone interest rate cuts until later in the year.
By 04:10 ET (08:10 GMT), the Dollar Index, measuring the greenback against a basket of six major currencies, edged 0.1% higher to 104.670, stepping away from its near two-week low of 104.33 recorded on Tuesday.
The dollar’s ascent is supported by rising expectations as traders await Friday’s release of the U.S. core personal consumption expenditures price index report, regarded as the Federal Reserve’s preferred gauge of inflation.
Moreover, the dollar received a modest lift following an increase in U.S. Treasury yields, prompted by a lackluster debt auction for sales of two-year and five-year notes, which raised concerns about demand for U.S. government debt.
Analysts at ING noted, “The ability of the U.S. government to fund its debt at the same price will be a hot topic for financial markets this year, but so far higher U.S. yields have been associated with a stronger dollar.”
Nevertheless, uncertainties persist regarding the timing of the Federal Reserve’s first interest rate cut, with inflation remaining above target and the possibility of another hike lingering.
Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, remarked, “I don’t think anybody has totally taken rate increases off the table… the odds of us raising rates are quite low, but I don’t want to take anything off the table.”
Expectations for the core PCE index indicate a largely steady monthly performance, but any indications of sustained inflationary pressures are poised to bolster the dollar.
