Investing.com - The dollar held onto gains against the other major currencies in subdued trade on Tuesday, as the greenback recovered from comments by a Federal Reserve official on Monday sparking fresh uncertainty over the timing of future U.S. rate hikes.
The dollar initially came under pressure after Fed Governor Lael Brainard warned against raising interest rates too quickly.
In a speech on Monday, Brainard says economic progress continues in the U.S., but the Fed would be wise to continue keeping policy loose.
The comments came after Boston Fed President Eric Rosengren said on Friday that low interest rates are increasing the chance of overheating the U.S. economy.
EUR/USD edged up 0.10% to 1.1246.
Earlier Tuesday, the ZEW Centre for Economic Research said that its index of German economic sentiment was unchanged at 0.5 this month. Analysts had expected the index to rise by 2.0 points to 2.5 in September.
The index of euro zone economic sentiment advanced to 5.4 in September from 4.6 a month earlier, missing forecasts for a reading of 6.7.
GBP/USD tumbled 1.02% to 1.3277, the lowest since September 1.
The pound weakened after the U.K. Office for National Statistics said the consumer price index came in at an annualized rate of 0.6% last month, compared to expectations for a 0.7% rise.
Month-over-month, consumer prices rose 0.3% in August, compared to estimates for a gain of 0.4%.
Core CPI, which excludes food, energy, alcohol, and tobacco costs rose by 1.3% last month, unchanged from July and compared to forecasts for a reading of 1.4%.
USD/JPY rose 0.32% to 10218, while USD/CHF held steady at 0.9718.
The Australian and New Zealand dollars pushed lower, with AUD/USD down 0.79% at 0.7506 and with NZD/USD retreating 0.90% to 0.7286.
Elsewhere, USD/CAD climbed 0.89% to trade at a one-month high of 1.3155.
The commodity currencies were hit by tumbling oil prices on Tuesday after the International Energy Agency warned that oil markets would likely remain oversupplied next year due to a slowdown in demand.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.16% at 95.27.