Dollar edges lower ahead of hefty data dump

investing.com:

Investing.com — The U.S. dollar edged lower in early European trade Tuesday, retreating from near three-month highs ahead of the release of a slew of key economic data this week. 

At 03:10 ET (07:10 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 103.907, after slipping 0.2% on Monday.

Traders appear to have decided to book some gains at the start of a week that includes the release of several key economic data points, culminating on Friday with the widely-watched monthly employment report.

U.S. consumer confidence data are due later on Tuesday, while a revised reading on second-quarter gross domestic product is due on Wednesday. Readings on personal consumption expenditures, the Federal Reserve’s preferred inflation gauge, are due on Thursday, while August nonfarm payrolls are set to close out the week. 

Any signs of resilience in the U.S. economy, particularly regarding inflation and employment, will provide the Fed with more impetus to keep raising interest rates.

That said, the dollar remains over 2% this month and is coming off a run of six straight weeks of gains as resilient U.S. economic data bolstered expectations that rates may stay higher for longer.

Fed chair Jerome Powell added to these expectations with his comments at the Jackson Hole symposium last week, suggesting further interest rate increases may be needed to cool still-too-high inflation.

“We will proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data," Powell stated.

The Fed next meets in September, and while it is not expected to raise rates then, expectations are rising that the U.S. central bank will raise