Investing.com - The dollar edged up to fresh seven-month highs against the other major currencies on Tuesday, as hopes that the Federal Reserve will raise interest rates at its meeting next month continued to lend broad support to the greenback.
USD/JPY held steady at one-week highs of 123.26.
Demand for the dollar continued to be underpinned by expectations that the Fed will hike interest rates as soon as next month.
U.S. inflation data due out later in the day was expected to provide more clarity on prospects for a December rate hike.
EUR/USD slipped 0.20% to fresh six-month lows of 1.0666.
Markets shrugged off a report by the ZEW Centre for Economic Research showing that its index of German economic sentiment rose by 8.5 points to 10.4 this month from October’s reading of 1.9, which was a 12-month low.
Analysts had expected the index to rise by 4.1 points to 6.0 in November.
However, the index of euro zone economic sentiment declined to a 12-month low of 28.3 in November from 30.1 a month earlier, missing forecasts for 35.2.
The single currency was already under pressure from heightened expectations that the European Central Bank will enlarge its stimulus program, aimed at boosting price growth in the euro area, before the years end.
ECB President Mario Draghi was to speak at an event in Madrid later in the day.
Elsewhere, the dollar was steady against the pound, with GBP/USD at 1.5201 and was higher against the Swiss franc, with USD/CHF adding 0.16% to 1.0113.
Sterling found support after the U.K. Office for National Statistics said the annual rate of inflation fell 0.1% last month, in line with forecasts, after a 0.1% fall in September.
It was the first time annual inflation has fallen for two consecutive months since the series was created in 1996.
The consumer price index ticked up 0.1% from a month earlier, matching forecasts. However, underlying inflation, which strips out food, energy, alcohol and tobacco costs rose 1.1% last month, above forecasts for a reading of 1.0%.
The data also showed that the house price index rose 6.1% in September, above forecasts for a gain of 5.4% and following a 5.5% increase in August.
The Australian was higher, with AUD/USD rising 0.26% at 0.7115, while NZD/USD slid 0.27% to 0.6479.
Meanwhile, USD/CAD edged down 0.19% to trade at 1.3307, after rising to one-month highs of 1.3371 on Monday.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.10% at a fresh seven-month peak of 99.58.