The dollar was parked below recent peaks on Tuesday, as a three-week rally faded and traders waited on economic data to figure on whether it's warranted to push the dollar up any further.
"There are two reasons why the dollar's bounce is getting stuck," he added, noting that European and U.S. growth forecasts are converging and the difference in relative rate expectations is narrowing.
Fed funds futures currently imply about a 16% chance of that, while in Europe a 50 bp hike in March is all but priced in. Elsewhere currency markets were broadly steady. The New Zealand dollar held at $0.6259 ahead of a central bank meeting on Wednesday. Markets are pricing a 50 bp hike to bring New Zealand's benchmark interest rate to 4.75% and are also weighing the economic impact of"As markets contemplate the cost of rebuilding and the impact that’s likely to have on inflation, insurance flows and infrastructure spending, it’s quickly becoming a potential driver of sustained New Zealand dollar strength," ANZ analysts said.
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