The dollar rose in European trade on Wednesday against a basket of major rivals, extending gains for the second session and hitting a week high on short-covering.
The gains come ahead of US growth data for the fourth quarter of last year, which might provide fresh clues on the future of interest rates.
The Index index rose 0.4% to 104.24, a week high, with a session-low at 103.81.
The index rose 0.1% on Tuesday, the second profit in three days off three-week lows at 103.43.
US Rates
Current pricing for a 0.25% Fed interest rate cut in March stands at just 1%, with a 20% chance of a rate cut in May, and a 62% chance of a rate cut in June.
Investors now expect 75 basis points of total US rate cuts this year, down from 150 basis points in previous forecasts.
US Growth Data
Now investors await important USD GDP growth data for the fourth quarter of last year to gauge the strength of the economy.
US GDP growth is estimated at 3.3% in the fourth quarter, following an excellent 4.9% growth rate in the third.
Obviously strong results will hurt the odds of early Fed rate cuts in May and June, boosting the dollar and hurting gold prices, and vice versa.
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