Both the Euro and Pound edged up on Tuesday as a halt in rising oil prices pushed them closer to their recent multi-month highs against the Dollar.

The broader trend continues to be influenced by the anticipated US rate cuts, which have weighed on the Dollar in recent weeks. While investors widely expect a rate cut at the Federal Reserve's September meeting, there is ongoing debate over whether the cut will be 25 basis points or a more substantial 50 basis points.

The Euro and Sterling both gained approximately 0.1%, reaching $1.1169 and $1.3203 respectively. The Euro remained just below Monday's 13-month high, while the Pound hovered near last week's peak, the highest in over two years.

Both currencies, especially the Euro, have significantly benefited from the recent weakness of the Dollar. However, they may face challenges in advancing further from their current levels, Reuters reports.

“After a strong rally since early August, it looks Euro/Dollar could be due some consolidation. We would favour a 1.1100-1.1200 trading range for now – waiting for some US activity data to disappoint,” according to Chris Turner global head of markets at ING.

“The run-up in oil prices on the back of increased Middle East tension and Libyan supply challenges will not be helping (the Euro against the Dollar),” he went on to say.

Oil prices stabilised on Tuesday, trading within a narrow range after a more than 7% surge over the previous three sessions. This recent increase was driven by concerns over supply disruptions due to fears of a broader Middle East conflict and potential shutdowns of Libyan oilfields.

Elsewhere, the Japanese Yen edged down, with the greenback up 0.3% at 144.95 per Dollar.

As a result, the Dollar index stood at 100.88, close to a one-year low, supported by expectations of a US rate cut in September. 

This outlook was reinforced by Federal Reserve Chair Jerome Powell's comments in his Jackson Hole speech on Friday, which suggested such a move.