The US Dollar was trading near a two-week high against the Euro on Wednesday, whilst the Japanese Yen consolidated near the middle of its range in July ahead of this week's central bank meetings.
There was little change for the Dollar index – measuring the greenback against six rivals – at 101.33 at the time of writing, after reaching a high of 101.65 overnight for the first time since 11th July.
The Euro fell 0.08% to $1.10495 to move closer to the previous session's low of $1.1035, a level last recorded on 12th July, Reuters reports.
The Dollar index has been bolstered from a 15-month low of 99.549 last week thanks to the ongoing indications of a buoyant US economy from a series of rate hikes by the Federal Open Market Committee (FOMC).
Furthermore, the latest data reveals US consumer confidence reached a two-year high this month thanks to a persistently tight labour market and weakening inflation.
Traders forecast a 25-basis point rise from the Federal Reserve on Wednesday but are divided on the likelihood of another rise later in the year.
In Europe, the European Central Bank (ECB) has a meeting scheduled on Thursday, where a 25-basis point rise is also forecast. However, mounting signs of an economic slowdown have questioned the probability of another hike by the end of 2023.
"Given the deceleration in underlying inflation, we think the risk is (Fed Chair Jerome) Powell cools on another hike by describing the FOMC as 'data dependent,'" which would pressure the Dollar, according to Joseph Capurso, a Commonwealth Bank of Australia strategist.
"If the ECB retain their hawkish bias, by no means guaranteed but more likely than the FOMC, EUR is likely to track higher this week."
Elsewhere, the Bank of Japan is meeting on Friday with speculation for a more hawkish stance to the yield curve control (YCC) gradually receding over the past few days.
The greenback was 0.04% up at 141.025 Yen on Wednesday, following a rally from a multi-week low of 137.245 in the middle of the month.
Whereas the Pound edged down 0.1% to $1.2888 ahead of the Bank of England's meeting next week.