The dollar index hovered at its highest level in a month against a basket of currencies on Wednesday, as statements by Christopher Waller, a member of the Federal Reserve Board of Governors, weakened expectations of an interest rate cut in March.
Waller said on Tuesday that although the United States is close to the central bank's 2 percent inflation target, the bank should not rush to cut its benchmark interest rate until it is clear that lower inflation will continue.
Market expectations for an interest rate cut in March fell to a chance of 62.2 percent, compared to 76.9 percent in the previous session, according to the CME Fed Watch tool.
The dollar index, which measures the performance of the US currency against a basket of major currencies, reached 103.35 points after rising to 103.42 points during the previous session, its highest level since December 13. Tuesday also saw the largest one-day percentage increase for the dollar since January 2.
Meanwhile, the euro hovered near a one-month low of $1.0875 after its biggest one-day drop in two weeks, following comments from several European Central Bank policymakers this week that kept uncertainty over the timing of interest rate cuts.
The pound was last trading largely unchanged at $1.2636, after a sharp decline on Tuesday in the wake of data showing British wage growth slowed in the three months to November.
The Japanese yen came under some pressure again. It reached its lowest level since early December at 147.45 per dollar, in light of the support the US currency received from the rise in US bond yields.
