Investing.com - The dollar was hovering at a one-month high against other major currencies on Wednesday, after hawkish comments by Federal Reserve Chair Janet Yellen and hopes for an upcoming U.S. tax reform.
In a speech on Tuesday, Fed Chair Janet Yellen said on Tuesday that the Federal Reserve needs to continue gradual interest rate hikes despite uncertainty about the path of inflation.
It would be "would be imprudent to keep monetary policy on hold until inflation is back to 2%," she said.
The U.S. dollar was also boosted ahead of a highly-anticipated U.S. tax plan, set to be unveiled on Wednesday. The plan has been developed over several months by six White House and congressional Republicans, with no input from Democrats.
The safe haven yen and Swiss franc were weaker, with USD/JPY up 0.61% at 112.93 and with USD/CHF climbing 0.63% to trade at 0.9749.
However, geopolitical concerns remained as U.S. President Donald Trump said on Tuesday that a military option for North Korea isn't the preferred choice but if this were to be the case, it would be "devastating" for Pyongyang.
EUR/USD declined 0.44% to 1.1741, its lowest since August 18, as investors were still digesting the fact that German Chancellor Angela Merkel will be facing months of coalition talks to try to form a stable government.
Meanwhile political risk in Spain still weighed, with the Catalan government planning to hold a referendum on whether to break away from Spain on Sunday, despite opposition from Spanish authorities.
The pound was also lower, with GBP/USD down 0.49% at a nearly two-week low of 1.3393.
Elsewhere, the Australian and New Zealand dollars were weaker, with AUD/USD down 0.60% at 0.7839, the lowest since August 16, and with NZD/USD shedding 0.26% to 0.7188.
Meanwhile, USD/CAD gained 0.45% to trade at a three-week high of 1.2405.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.48% at a one-month peak of 93.25 by 05:20 a.m. ET (09:20 GMT).