US dollar little changed after hitting a 2-week high against the euro

The U.S. dollar reached a two-week peak compared to the euro, with investors preparing for a week filled with crucial data, including the U.S. payrolls report due on Friday.

At 18:40 EST (22:40 GMT), EUR/USD was little changed at 1.1046 while the USD/JPY fell 0.1% to 145.31.

This jobs report is expected to have a major impact on the Federal Reserve’s decision, which is due September 18.

The anticipation of the payrolls data follows comments from Fed Chair Jerome Powell last month, signaling the onset of interest rate reductions due to concerns about a weakening labor market.

The likelihood of an interest rate cut at the Federal Reserve’s meeting is a focal point for investors. According to the CME FedWatch tool, there is a 63% chance of a 25 basis point cut and a 37% chance of a 50 basis point reduction.

Overall, the market has factored in a total of 100 basis points in cuts for the entire year.

The euro experienced a decline, dropping 0.24% to $1.1043 against the dollar on Tuesday. It had earlier touched a two-week trough, falling to $1.1033 during the trading session.

Amidst a broader sell-off in stocks and riskier currencies on Tuesday, the dollar, traditionally seen as a safe-haven asset, also seemed to gain from investors’ flight to safety.