Investing.com - The dollar was broadly higher against a basket of other major currencies on Tuesday, as growing hopes for a U.S. rate hike continued to support demand for the greenback and as concerns over Greece's ability to secure additional bailout funds dampened risk sentiment.
The dollar remained supported as investors looked ahead to Friday’s U.S. nonfarm payrolls report for further indications on the path of monetary policy.
The greenback has been boosted this year by expectations for higher interest rates, but its rally paused after the Federal Reserve statement released on March 18 indicated that it may hike rates more gradually than markets had expected.
Late last week, Fed Chair Janet Yellen said a rate hike may be warranted later this year, but added that weakening inflation pressures could force the Fed to delay.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.58% to 98.88.
EUR/USD dropped 0.96% to a more than one-week low of 1.0732 after Greece failed to reach an agreement on a program of economic reforms with its lenders on Monday.
Athens will run out of cash later this month unless it can reach a compromise with its creditors in time to unlock more bailout funds.
Earlier Tuesday, preliminary data showed that euro zone consumer prices dipped 0.1% on a year-over-year basis in March, in line with expectations after a 0.3% drop in February.
Core inflation, which excludes volatile food and energy costs, was up 0.6% year-on-year, down from 0.7% in February.
A separate report showed that the euro area unemployment rate ticked down to 11.3% in February from 11.4% in January. It was the lowest unemployment rate since May 2012.
The pound was also lower, with GBP/USD down 0.22% to 1.4772, even after data showed that the U.K. economy grew 0.6% in the fourth quarter, up from the preliminary estimate of 0.5%.
The annual rate of growth was also revised higher to 2.8% from the initial estimate of 2.6%.
Another report showed that Britain’s current account deficit narrowed in the final quarter of the year, but rose to a record high of 5.5% of GDP for 2014 as a whole.
Elsewhere, the dollar was steady against the yen, with USD/JPY at 120.03 and higher against the Swiss franc, with USD/CHF climbing 0.84% to 0.9750.
The Australian, New Zealand and Canadian dollars were broadly weaker, with AUD/USD dropping 0.59% to 0.7607 and NZD/USD retreating 0.40% to 0.7470, while USD/CAD advanced 0.49% to 1.2744.
The kiwi showed little reaction to data earlier showing that the ANZ business confidence index for New Zealand rose to 35.8 this month from a reading of 34.4 in February.
Another report showed that New Zealand's building consents declined 6.3% in February after a 4.6% fall in January, whose figure was revised from a previously estimated 3.8% slip.
Later in the day, the U.S. was to release data on consumer confidence.