The U.S. dollar hit a more than two-week high against the euro on Tuesday on continued belief that the Federal Reserve would hike rates this year while the European Central Bank could ease further.
The euro hit $1.11130, its lowest against the greenback since Sept. 4, following Fed officials' recent comments indicating that the U.S. central bank was still on track to raise interest rates this year for the first time since 2006.
Analysts said traders expect the ECB, meanwhile, to ease policy further. One- and three-month euro/dollar risk reversals , which measure demand for options on a currency falling or rising, show their biggest bias in over seven weeks for a weaker euro.
"The market...is looking forward to December as pretty much a launch date," said Boris Schlossberg, managing director at BK Asset Management in New York, in reference to the Fed's first rate hike.
Rate hikes are expected to boost the dollar by driving investment flows into the United States.