The dollar hit a fresh three-week high against its developed-market peers in early trading in Europe Tuesday, after Federal Reserve Chairman Jerome Powell indirectly argued against cutting interest rates in the near term due to the already-high level of corporate debt.

“Business debt has clearly reached a level that should give businesses and investors reason to pause and reflect,” Powell said at a conference, noting that corporate borrowing at a record level of around 35% of corporate assets.

Even so, he pushed back against suggestions that the corporate debt situation resembled the days before the financial crisis in 2007, saying the comparison was “not fully convincing”.

At 03:00 AM ET (0700 GMT), the dollar index, which measures the greenback against a basket of six major currencies, was at 97.928, having hit 97.953 earlier, its highest level since April 26.

In part, that reflected a sharp rise against the Aussie and kiwi after Reserve Bank of Australia Governor Philip Lowe said the bank would examine the case for cutting its cash rate at its next policy meeting in June.

Elsewhere, the Chinese yuan remained broadly stable as the trade tension between the U.S. and China subsided marginally. The Commerce Department said it would offer U.S. companies a temporary exemption – in specific cases – from the ban on selling to telecoms giant Huawei that was at the heart of Monday’s volatility. Europe’s stock markets opened with a modest relief rally.

That didn’t stop Huawei founder Ren Zhengfei from predicting further trouble ahead.

“We have sacrificed ourselves and our families for our ideal, to stand on top of the world,” Ren told Chinese state TV. “To reach this ideal, sooner or later there will be conflict with the US.”

In Europe, both the euro and the British pound remain under pressure from the revived threat of a ‘Hard Brexit’ and from the rhetoric around the European parliament elections that start on Thursday. –Investing.com