New York, Aug 31 Reuters The dollar dipped against a basket of peer currencies on Wednesday, but was on track for its thirdstraight monthly rise, as traders brace for more oversized interest rate hikes from the U.S. Federal Reserve.

The dollar index , which measures the greenback against a basket of six currencies, was last down 0.184 at 108.56, after earlier having come within a whisker of Monday39;s twodecade peak of 109.48.

The index is on track for a rise of over 3 in August, and its highest endofmonth closing level since May 2002.

Fed officials on Tuesday reiterated their support for further rate hikes to quell inflation, with New York Fed chief John Williams telling the Wall Street Journal that it will take some time before interest rates would be cut.

His comments followed a hawkish speech from Fed Chair Jerome Powell at the Jackson Hole central banking symposium in Wyoming late last week that shut the door on the idea that the Fed might pivot and begin lowering rates by mid2023, which prompted a wave of dollar strength.

Traders are now pricing in about a 70 chance of a 75 basis points Fed rate hike next month, according to data from Refinitiv.

All of these bets that came in late July about the Fed potentially pivoting have to unwind, and so that39;s meant we39;ve got to buy dollars again because the Fed is not done, said Erik Bregar, director of FX precious metals risk management at Silver Gold Bull.

The only real change we39;ve had now is that we have an…