The US dollar rose slightly on Tuesday ahead of a scheduled speech by Federal Reserve Chair Jerome Powell later in the session, following the central banks recent decision to cut interest rates.

At 03:00 AM ET (08:00 GMT), the dollar index, which measures the greenback against a basket of six other currencies, edged up 0.1% to 97.012, rebounding modestly after a decline in the previous session.

Focus on Powells Speech

The dollar has been trading in a narrow range this week after sharp swings last week, as attention turns to Powells remarks later today.

Powells speech comes after the Fed cut rates by 25 basis points at its latest meeting last week. However, the central banks guidance on the future path of borrowing costs left room for debate over the possibility of further cuts before the end of 2025, putting more focus on any signals Powell may provide regarding monetary policy direction.

New Fed governor Steven Miran on Monday called for a sharp rate cut, but several of his colleagues struck a more cautious tone, stressing that the priority should remain ensuring inflation returns to the Feds 2% target.

Analysts at ING noted: Both Alberto Musalem, Raphael Bostic, and Beth Hammack are on the hawkish side of the spectrum, which is not particularly surprising, but their remarks suggest the hawkish front remains relatively firm despite mounting pressure for easing.

According to CMEs FedWatch tool, markets currently assign about a 90% chance of the Fed lowering its target rate by 25 basis points from the current range of 4%4.25% at its October meeting. Markets also see around a 75% probability of another 25 basis point cut at the subsequent December meeting.

Euro Slips Despite Strong PMI Data

In Europe, the EUR/USD pair fell 0.1% to 1.1789, with the euro paring gains after its best daily performance in a week during Mondays session.

Data released earlier Tuesday showed that economic activity in Germanythe eurozones largest economyaccelerated in September, recording its fastest pace in 16 months thanks to a rebound in the services sector.

Germanys flash composite PMI, compiled by SP Global, rose to 52.4 in September from 50.5 in August, beating expectations of 50.6.

September marked the fourth straight month the index, which tracks services and manufacturing and accounts for more than two-thirds of the eurozone economy, came in above the 50 threshold that signals growth.

ING commented: This may not be grounds for major excitement about the euro, but it is probably enough to keep the single currency well-positioned to benefit from further shifts away from the dollar.

The bank added: We expect EUR/USD to hover around the 1.1800 level today, with the potential for more moderate gains later this week.