Greenback Finds Buyers

The greenback was rallying modestly early Tuesday after a published report said a Federal Reserve rate cut this week might not be the done deal most market participants have been expecting.

Euros were trading for $1.441, down slightly from $1.443 late Monday. The dollar rose to 114.9 Japanese yen, up from 114.63 yen at the end of the last session.

Many traders have been dumping dollars in anticipation of declining yields, but the U.S. currency caught a bid after The Wall Street Journal reported that the Fed wasn't guaranteed to reduce its fed funds target when it wraps up a two-day meeting Wednesday.

"If indeed this represents a message from the Fed itself, it is probably more of an effort to dispel the minority notion of a [half-point] cut," writes Mark Chandler, a fixed-income strategist at RBC Capital Markets in New York, in a research note.

While the consensus view on Wall Street is for a quarter-point cut, some observers have speculated that a reduction of 50 basis points is a possibility. Stocks would likely react negatively if rates aren't cut, but the dollar would be in line to strengthen should the Fed stay on hold.

Elsewhere in the currency markets, the British pound was buying $2.0665, up from $2.0637, on the possibility that the Bank of England might leave its benchmark borrowing rate unchanged rather than lowering it.