NEW YORK: The dollar was flat to slightly lower against major currencies on Tuesday in choppy trading, after a round of mainly weak economic data, but still on track for its first monthly gain since September, as investors wagered that interest rates will remain elevated for some time.

The greenback’s overall rally this month gathered momentum in recent weeks as upbeat economic data led to mounting expectations that the Federal Reserve will have to raise interest rates more than initially expected.

US rate futures have priced in a peak fed funds rate, the Federal Reserve’s target policy rate, of 5.4% hitting in September. The market has all but priced out rate cuts this year.

“The market has repriced the Fed and it now sees a higher terminal rate and low scope for cuts for the rest of the year. And that’s what the dollar strength reflects,” said Vassili Serebriakov, FX strategist, at UBS.

“The market started January with a strong dollar-bearish consensus and that trade has been unwound for the most part in February. But equities seemed to be quite resilient and that’s seemed to be limiting the dollar’s upside,” he added.

The dollar index, which measures the currency against a basket of peers, was flat at 104.63, but was still set for a February gain of 2.4%, its first monthly increase since September.