Investing.com - The dollar remained broadly higher against a basket of other major currencies on Tuesday, as growing hopes for a U.S. rate hike continued to support demand for the greenback and as concerns over Greece's ability to secure additional bailout funds weighed on sentiment.
The dollar remained supported as investors looked ahead to Friday’s U.S. nonfarm payrolls report for further indications on the path of monetary policy.
The greenback has been boosted this year by expectations for higher interest rates, but its rally paused after the Federal Reserve statement released on March 18 indicated that it may hike rates more gradually than markets had expected.
Late last week, Fed Chair Janet Yellen said a rate hike may be warranted later this year, but added that weakening inflation pressures could force the Fed to delay.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.43% to 98.74.
EUR/USD dropped 0.78% to a more than one-week low of 1.0747 after Greece failed to reach an agreement on a program of economic reforms with its lenders on Monday.
Athens will run out of cash later this month unless it can reach a compromise with its creditors in time to unlock more bailout funds.
Earlier Tuesday, preliminary data showed that euro zone consumer prices dipped 0.1% on a year-over-year basis in March, in line with expectations after a 0.3% drop in February.
Core inflation, which excludes volatile food and energy costs, was up 0.6% year-on-year, down from 0.7% in February.
A separate report showed that the euro area unemployment rate ticked down to 11.3% in February from 11.4% in January. It was the lowest unemployment rate since May 2012.
The pound was also lower, with GBP/USD down 0.11% to 1.4789, even after data showed that the U.K. economy grew 0.6% in the fourth quarter, up from the preliminary estimate of 0.5%.
The annual rate of growth was also revised higher to 2.8% from the initial estimate of 2.6%.
Another report showed that Britain’s current account deficit narrowed in the final quarter of the year, but rose to a record high of 5.5% of GDP for 2014 as a whole.
Elsewhere, the dollar was lower against the yen, with USD/JPY shedding 0.21% to 119.86 and higher against the Swiss franc, with USD/CHF climbing 0.59% to 0.9725.
The Australian and New Zealand were weaker, with AUD/USD dropping 0.63% to 0.7605 and NZD/USD falling 0.28% to 0.7478. The kiwi showed little reaction to data earlier showing that the ANZ business confidence index for New Zealand rose to 35.8 this month from a reading of 34.4 in February.
Meanwhile, USD/CAD pulled away from session highs of 1.2783 but was still up 0.44% at 1.2738 after Statistics Canada said the economy contracted 0.1% in January, slowing after recording growth of 0.3% in December.
While economists had forecast growth of 0.2%, some investors had feared a contraction of 0.2% due to the impact of lower oil prices.
Later in the day, the U.S. was to release data on consumer confidence.