Investing.com – The U.S. dollar strengthened on Wednesday ahead of an opportunity to assess the outlook for U.S. interest rates, while the euro retreated.

At 04:10 ET (08:10 GMT), the Dollar Index, which tracks the dollar against a basket of six other currencies, was trading 0.1% higher at 102.387, not far from Friday’s seven-week high of 102.69.

The dollar is waiting for Fed minutes

The dollar has been in demand since Friday’s mighty report, which prompted the market to largely rule out the chance of another 50-basis-point cut in November in favor of a more conventional 25-basis-point cut.

As CME’s FedWatch tool showed, investors currently have about an 85% chance of a quarter-basis-point cut being included, as well as a slim chance that the Fed will leave interest rates unchanged.

Attention now turns to the release of the September Fed meeting, which is expected later in the session.

At this meeting, the central bank decided to cut interest rates by a significant 50 basis points, and the minutes are likely to provide a rationale for this decision. That said, Fed policymakers have been tight-lipped over the past few days, so it’s debatable whether the minutes can add anything modern.

The September report will be released on Thursday and will likely also have an impact on the Fed’s outlook.

The euro is losing before the ECB meeting

In Europe, it fell 0.2% to 1.0962, with the euro weakening despite the publication of better-than-expected German trade data in August, which gave hope for recovery in the euro zone’s largest economy.

rose 1.3% month-on-month in August, official data showed on Wednesday, defying expectations of a 1.0% contraction.

It meets next week and is expected to ease policy again, having already cut interest rates twice this year as economic growth weakens and inflation pressures ease.

“The reduction is very likely and will not be the last, and its rhythm will depend on the development of the fight against inflation,” ECB policymaker Francois Villeroy de Galhau said in an interview on Wednesday.

fell 0.2% to 1.3081, not far off Monday’s three-week low of 1.3059.

“The British press is starting to run wild with speculation about what Chancellor Rachel Reeves will present in her first budget on October 30,” ING analysts said in a note. “Investors continue to watch for any signs that the UK gold market is becoming nervous again about potential spending plans.”

Kiwi loses after interest rate cut

fell 0.9% to 0.6085 and the kiwi dollar fell to its lowest level since August 19 after cutting interest rates by 50 basis points and leaving the door open to even more aggressive monetary easing.

rose 0.2% to 148.53, after hitting a seven-week high of 149.10 on Monday.

The yen may be volatile over the next few weeks given that Japan will hold elections on October 27, ahead of the Bank of Japan’s October monetary policy meeting and next month’s U.S. presidential election.

rose 0.1% to 7.0643, after the pair rose 0.6% in the previous session, as onshore trading resumed after the holiday Golden Week.