REUTERS

The US dollar hovered around multi-week lows against the euro and yen on Tuesday as investors awaited US economic data later in the session that could affect expectations for the Federal Reserve’s policy path.

Central bank decisions are in focus this week with the European Central Bank and Bank of England holding meetings on Thursday, while the Bank of Japan will announce its policy decision on Friday.

Economic data showing the euro zone economy remaining resilient, despite US import tariffs, supported the ECB’s higher-for-longer policy rate stance and bolstered the euro.

Meanwhile, the absence of pushback from the ECB on market bets for rate hikes in late 2026 or early 2027 may be read as tacit approval, leaving room for a hawkish surprise at this week’s policy meeting.

The euro was up 0.1 percent to $1.1761 after hitting $1.1769 on Monday, its highest since September 24. A rate hike from the BoJ is largely baked in, but any signal that policymakers could tighten again before spring wage talks would mark a hawkish shift.

Big Japanese manufacturers’ business sentiment hit a four-year high in the three months to December, supporting expectations for additional tightening, but analysts said the BoJ’s policy update may fail to support the yen as fiscal concerns weigh.