Investing.com – The U.S. dollar slipped lower in early European trade Friday, as a rebound from seven-month lows faltered, ahead of Fed Chair Jerome Powell’s eagerly-anticipated speech at the Jackson Hole symposium. 

At 04:30 ET (09:30 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower to 101.245, not far removed from lowest levels since Jan. 2. 

Dollar weakens ahead of Powell’s speech

The dollar saw a small rebound earlier in the week, but has still registered losses of around 1% this week, heading for its fifth consecutive losing week.

This weakness followed concerns about a weakening economy and on expectations the Federal Reserve is close to cutting interest rates. 

The focus is now squarely on an address by Powell at the later on Friday, where he is expected to provide more cues on interest rates and the economy.

“He will probably use this speech to prepare markets for a September cut, which is entirely priced in and has been largely anticipated by July’s Fed minutes and recent Fed speakers,” said analysts at ING, in a note. 

“The question is whether he will go as far as opening the door to a 50bp move – if not in September, at a later point this year.”

Markets are now pricing in almost three quarters chance of the Fed cutting rates by 25 basis points at its September meeting, the CME FedWatch tool showed, with a 50 bps cut becoming less likely.

Euro, sterling gain on weak dollar

In Europe, traded 0.1% higher to 1.1123, not far from the 13-month high it touched on Wednesday.

Eurozone consumers’ inflation expectations over the next 12 months remained steady for the third month in a row in July, a European Central Bank survey showed on Friday.

This survey could be used by ECB policymakers as evidence that the public has faith in their ability to bring down inflation to their 2% goal while cutting interest rates.

The ECB has room to cut interest rates possibly two more times this year as inflation remains broadly on the declining path policymakers envisaged, ECB policymaker Martins Kazaks said. 

“We are broadly along the baseline of our projections and that is consistent with a gradual decline in interest rates,” Kazaks, Latvia’s central bank governor, said on the sidelines of the U.S. Federal Reserve’s Jackson Hole Economic Symposium. 

traded 0.3% higher to 1.3129, just shy of the 13-month high it hit on Thursday after the release of strong activity data for August.

Markets are now pricing in more rate cuts from the Fed by year-end than for the European Central Bank or Bank of England.

Yen gains as Ueda signals rate hikes

In Asia, fell 0.2% to 145.99, with the yen in demand after the Bank of Japan’s Ueda said that short-term interest rates were still too low, and needed to be brought up further to hit neutral levels. 

He also reiterated the bank’s recent messaging that it will raise interest rates further if inflation remains steady. 

Ueda’s comments boosted the yen, which has been on a tear since the central bank hiked rates by 15 basis points in late-July. 

traded 0.1% lower to 7.1372, while gained 0.4% to 0.6732 and rose 0.4% to 0.6159.