Dollar Subdued on Dovish Fed Signals

The dollar index was muted near 100 on Tuesday, remaining sideways for a fourth straight session as dovish remarks from Federal Reserve officials strengthened expectations for a near-term interest rate cut.

Fed Governor Christopher Waller signaled support for a December cut, citing rising labor market risks and echoing comments from San Francisco Fed President Mary Daly and New York Fed President John Williams. Waller also noted that policy decisions next year will depend heavily on a wave of delayed data following the government shutdown.

Markets are now pricing in an 81% chance of a 25 basis point reduction next month, up sharply from 42.4% a week ago.

Investors now look ahead to a series of US economic releases this week for further guidance, including retail sales, producer price index, durable goods orders and weekly jobless claims. The dollar traded flat to slightly weaker against other major currencies.