Dollar rose in European trade on Wednesday against a basket of major rivals, extending gains for the fourth straight session, and hitting a five-week high on strong demand.
US yields extended their gains after bullish remarks by Fed member Christopher Waller on the future of US interest rates, which hurt the prospects of early rate cuts.
Now traders are looking to assess fresh US data on retail sales later today, in addition to new remarks by Fed officials.
The Index
The dollar index rose 0.2% to 103.58, the highest since December 13, with a session-low at 103.26.
The index rose 0.7% yesterday, the largest profit since January 2.
US Treasury Yields
US 10-year treasury yields rose 0.4% on Wednesday, maintaining gains for the second session and approaching a one-week high at 4.083%, underpinning the dollar.
Fed Remarks
Federal Reserve member Christopher Waller said the US is close to achieving its 2% target inflation in the medium term, but the Fed still can't rush into early rate cuts.
He asserted the need for more information in upcoming months to ensure that inflation has sustainably declined.
US Rates
Following the bullish remarks, the odds for a 0.25% interest rate cut at the March meeting fell to 65%.
Now investors await important US retail sales and industrial production data to gather clues on the likely path ahead for policies.
Retail Sales
Investors await crucial US retail sales later today, expected to have increased by 0.4% last month, up from 0.3% in November, while core sales are expected up 0.2%.
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