Dollar edges higher, but stuck in range before Powell speech

US dollar bills lie in a stack.
Snap Decision | Photographer's Choice RF | Getty Images

The dollar gained on Wednesday but stayed within a relatively tight range a day ahead of a highly anticipated speech by Federal Reserve Chairman Jerome Powell.

Powell is scheduled to address the U.S. central bank's policy framework review, and investors are focused on whether he will hint at shifting the Fed's inflation target to an average.

"Targeting average inflation over time rather than setting a fixed 2% goal would likely mean lower rates for longer," said Raffi Boyadjian, senior investment analyst at online broker XM. "If the Fed confirms such a move, the greenback would stand little chance of a meaningful rebound anytime soon."

The Fed is thought to be still finalizing details of its review, however, with an announcement expected at its September meeting.

That risks leaving investors disappointed on Thursday if Powell does not announce the change.

"Markets are anticipating a dovish lean from Powell," Jonathan Coughtrey, managing director at Action Economics, said in a report. "Any sense of disappointment could catalyze a rebound phase in the dollar, which has been trending lower since March."

The dollar index, which tracks the greenback's value against a basket of currencies was up 0.15% at 93.14.

The index hit a session high of 93.37 after data showed that U.S. durable goods orders increased more than expected in July, but fell back again.

The euro dipped 0.26% against the greenback to $1.1802.

The yuan rose toward a seven-month high at $6.6879 after U.S. and Chinese trade officials reaffirmed their commitment to a Phase 1 trade deal, which eased concerns about a diplomatic standoff between the world's two-largest economies.