Investing.com - The U.S. dollar pared gains from early morning trade in the US session, after the latest U.S. Services Purchasing Managers Index (PMI) figure for February revealed a slow-down in the services sector.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.44% at 101.36.
The dollar started the session with strong gains, more than 0.5%, following bullish comments from two Federal Reserve policymakers, on a March interest rate hike, which sent the euro tumbling to session lows.
Philadelphia Fed President Patrick Harker said Monday that he would likely support an interest rate increase at the central bank’s next meeting in March should the economy continue to strengthen.
Harker’s comments, came fresh off the heels of Cleveland Fed President Loretta Mester's statement, the Cleveland Fed member said she would be “comfortable” raising interest rates at this point as inflation pressures pick up.
This latest batch of Fed members’ comments, added to the growing optimism surrounding a March rate hike, after Federal Reserve Chair Janet Yellen told congress in testimony last week, that waiting too long to raise interest rates would be “unwise” and pointed to signs that the economy was “coming close to achieving Fed mandates”.
According to Investing.com's Fed Rate Monitor Tool more than 20% of traders expect the Fed to raise interest rates at its next meeting in March.
The dollar retreated later during the U.S. session, after market research group Markit said that its flash services Purchasing Managers’ Index (PMI) eased to 53.9 in February, falling short of analysts’ expectation of an increase to 55.8.
Despite a strong round of Eurozone manufacturing data, the euro struggled for upside momentum, as concerns over upcoming elections in France and the Netherlands continued to weigh on the single currency.
The euro traded lower against both the dollar and sterling, with EUR/USD down 0.59% at $1.0548 and EUR/GBP down 0.65% at £0.8464
GBP/USD traded flat at $1.2464.
Meanwhile, the dollar continued its march higher against the yen, the USD/JPY climbed 0.45% to 113.55.