The dollar eased against a basket of its peers on Wednesday, but remained supported near two-month highs as positive U.S. housing data and recent hawkish comments by Federal Reserve officials indicated that interest rates could soon rise.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, eased to 95.53, just below overnight highs of 95.66, the most since March 29.
Demand for the dollar continued to be underpinned after data on Tuesday showing that U.S. new home soared to the highest level since the start of 2008 in April.
The Commerce Department said new home sales rose by 16.6% to an annual unit rate of 619,000 last month.
The data reinforced expectations that the Fed could raise interest rates in the near term after last week’s April Fed meeting minutes flagged a possible rate hike if the economy continues to improve.
Higher rates are positive for the dollar because they make the U.S. currency more attractive to yield-seeking investors.
EUR/USD edged up to 1.1147 from Tuesday’s lows of 1.1131, the weakest level since March 16.
