Investing.com - The dollar was at one-month highs against a basket of the other major currencies on Wednesday supported by comments from Federal Reserve Chair Janet Yellen and as political risk continued to pressure the euro.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.41% at 93.19 by 03:37 AM ET (07:37 GMT), the highest since August 31.
Demand for the dollar continued to be underpinned after Yellen said Tuesday that the Fed needs to continue with gradual rate hikes in spite of uncertainty over the inflation outlook.
The remarks came after the Fed indicated last week that it would like to raise rates once more this year and three times in 2018.
Higher rates tend to boost the dollar by making the U.S. currency more attractive to yield-seeking investors.
The dollar was also boosted by the broadly weaker euro, which remained on the defensive in the wake of Sunday’s German election results.
EUR/USD was down 0.37% at a five-week low of 1.1748.
Chancellor Angela Merkel won the elections but saw large numbers of voters desert her party for the far right.
Merkel now faces months of coalition talks to try to form a stable government, leaving investors’ worries that political uncertainty could hit the Germany economy and make closer euro zone integration more difficult.
The euro was steady against the yen, with EUR/JPY at 132.48.
The dollar pushed higher against the Japanese currency, with USD/JPY advancing 0.45% to 112.76, rebounding from Tuesday’s low of 111.49.
Elsewhere, sterling was lower against the stronger dollar, with GBP/USD down 0.56% at 1.3380.
The pound was also a touch lower against the euro, with EUR/GBP rising 0.18% to 0.8779.
Investors were looking ahead to the announcement of a tax plan by the U.S. administration in Congress later in the day, along with a report on U.S. durable goods orders.