The U.S. Dollar Strengthens Ahead of the Federal Reserve's Anticipated Rate Cut

The U.S. dollar strengthened against a basket of currencies on Tuesday, extending gains from the previous session, as investors positioned themselves ahead of an expected interest rate cut by the Federal Reserve.

The Fed is widely expected to cut rates by 25 basis points at the conclusion of its two-day policy meeting on Wednesday. The cut would be the first by the Fed since December 2018.

The dollar index, which measures the greenback against a basket of six major currencies, rose 0.2% to 98.09, its highest level since June 19. The euro fell 0.2% to $1.1145, while the Japanese yen was down 0.1% to 107.80 per dollar.

The dollar has been supported in recent weeks by expectations of a Fed rate cut. The central bank has signaled that it is willing to cut rates to support the economy amid slowing global growth and trade tensions.

However, some analysts are cautious about the dollar's strength, arguing that the greenback could weaken if the Fed signals that it is willing to cut rates more aggressively than expected.

The Fed is expected to release a statement following its meeting on Wednesday, accompanied by a press conference by Fed Chairman Jerome Powell.