The US dollar rose in European trade on Tuesday for the first time in three sessions against a basket of major rivals, as it tries to recover from five-week lows on short-covering.

Now traders await important US data later today to assess the odds of future Fed rate cuts.

The Index

The dollar index rose 0.5% to 99.44, with a session-low at 98.78.

On Monday, the index lost 0.2%, plumbing a five-week trough at 98.69 on US debt concerns.

US Rates

According to the Fedwatch tool, the odds of a June 0.25% interest rate cut by the Federal Reserve stood at just 6%.

The odds of a July rate cut stood at 25%.

Markets now expect 50 basis points of total rate cuts by the end of the year, starting October.

Analysts point to persistent concerns about future US government deficits as a major factor behind the weakness of the dollar as investors flee US assets.

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