U.S. stocks dipped slightly on Tuesday as the S&P 500 and Nasdaq hit new highs ahead of the expected rate cut from the Federal Reserve. Gold also reached a new high, and the euro hit a four-year peak amid the dollar’s decline.

The euro climbed nearly 1% to $1.1877, up nearly 15% against the dollar this year. The dollar’s struggles against crumbling rate differentials pose a challenge for the ECB, with core inflation below target.

The Fed is expected to cut rates by 25 basis points, supported by other central banks making policy decisions this week. Bond yield spreads are narrowing globally, reflecting investor optimism or potentially complacency.

A surge in hedging indicates a crowded trade of long Wall Street and short the U.S. dollar. Foreign investors are hedging to protect U.S. equity and fixed income holdings, with inflows into U.S. assets now predominantly hedged.

The dollar is under pressure as the Fed is set to resume rate cuts. Despite concerns, Wall Street’s profitability and Treasuries’ security continue to attract global capital, making U.S. assets the preferred choice.

Read more at Yahoo Finance: Trading Day: Fed clock tick-tock