The dollar was holding steady near two week highs against a currency basket on Monday ahead of a Federal Reserve meeting which officials could use to flag a rate cut later this year as the global growth outlook weakens amid heightened trade tensions.

While the U.S. central bank is widely expected to hold back from cutting interest rates on Wednesday some investors are betting that Fed Chairman Jerome Powell could use the meeting to lay the groundwork for cuts later in the year

The U.S. dollar index versus a basket of six major currencies was little changed at 97.058 03:46 AM ET (07:46 GMT) after rising to 97.580 on Friday, its highest since June 3.

"As long as Powell does not rule out near term rate cuts, the dollar will be top heavy after the Fed meeting," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

An escalating trade war between the U.S. and China has rippled through global supply chains in a hit to business investment, factory output and world growth.

"In addition to the upbeat U.S. data, the dollar is supported by weakness in other currencies, notably the euro and antipodeans," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

"The Fed might cut rates sooner or later but so might its antipodean counterparts as well as the (ECB), and such views put the dollar at an advantage."

Later on Monday the U.S. Trade Representative's Office will begin seven days of testimony from U.S. companies about President Donald Trump's plan to hit another $300 billion worth of Chinese goods with tariffs.

Some traders are watching these hearings, because complaints from U.S. businesses, which bear the cost of duties on goods they import, could sway Trump to delay additional tariff hikes.

The euro was little changed on Monday at 1.1210 after shedding about 0.6% on Friday, when it fell to an eight-day trough of 1.1203.

The Australian dollar was at 0.6872, just above a five-month low of $0.6862 set on Friday, when the currency retreated nearly 0.7%.

The New Zealand dollar, which slumped more than 1% during the previous session, was near three week lows at 0.6509.

The dollar was flat at 108.57 yen after edging up 0.15% on Friday.