By Joseph Adinolfi, MarketWatch , Rachel Koning Beals

Investors look to remarks from Yellen and bevy of Fed officials

The dollar strengthened against its main rivals on Tuesday after consumer confidence in March soared to its highest level in more than 16 years, sending Treasury yields and stocks higher.

The Conference Board said its consumer confidence index leapt to 125.6 in March from 116.1 in February, surpassing economists' expectations for a 114.1, according to a survey conducted by MarketWatch (http://www.marketwatch.com/story/consumer-confidence-soars-in-march-to-best-reading-in-16-years-2017-03-28).

The data helped allay fears about sluggish economic growth in the first quarter, suggesting that the apparent weakness in consumer spending during the first quarter will prove short-lived, according to Capital Economics. The Atlanta Fed's GDPNow tracker is presently projecting gross domestic product growth of just 1% during the first quarter.

The euro fell to $1.0837 in recent trade, compared with $1.0864 late Monday, while the dollar climbed to Yen110.72, compared with Yen110.66 late Tuesday.

Earlier, the dollar had weakened as investors questioned whether President Donald Trump would be able to garner enough support among fractious congressional Republicans to pass tax cuts and infrastructure spending.

The dollar shot higher after Trump's upset victory in the Nov. 8 U.S. election, thanks in part to the perception that his promised fiscal-stimulus measures would bolster growth and inflation, allowing the Federal Reserve to raise interest rates more quickly.

But the greenback has erased some of those gains since the beginning of the year as investors bet that the market was too quick to price in the potential economic impact of Trump's policies. Typically, higher interest rates, or the expectation that rates will rise, will cause a currency to strengthen by increasing the return on assets denominated in it.

Last week, House Republicans withdrew a plan to repeal and replace Obamacare amid opposition from conservatives and some centrists within their own party, shaking investor confidence in Trump's ability to gain passage of other parts of his agenda.

"The market is still wondering if, given the concerns about the deficit and debt, Trump will be able to get support for a significant amount of fiscal stimulus," said Jane Foley, senior currency strategist at Rabobank.

The ICE Dollar Index , which gauges the dollar's strength against a basket of six rival currencies, rose 0.3% to 99.46. U.S. stocks turned higher, too, with the Dow Jones Industrial Average on track to snap an eight-day losing streak.

Investors heard from Chairwoman Janet Yellen, Kansas City Fed President Esther George, and Dallas Fed President Rob Kaplan, but their remarks appeared to have little impact on the dollar.

Now, they're turning their attention to Fed Vice Chairman Stanley Fischer, who is set to appear on CNBC between 1:30 and 2 p.m. Eastern.

Fed Gov. Jerome Powell will also deliver public remarks at 4:30 p.m. Eastern.

The Fed raised interest rates two weeks ago and is expected to hike rates at least two more times, according to the central bank's projections. However, the dollar sold off following the decision as investors were disappointed by the Fed's reluctance to signal a faster pace of rate increases.

The Fed funds futures market are currently pricing in two more rate increases by December and higher interest rates are usually supportive of the dollar.

The British pound drifted lower against the dollar as investors braced for the U.K. government to officially invoke Article 50, a decision that's expected Wednesday. The move would formally begin negotiations between the U.K. and European Union over the terms of the former's exit from the trading bloc. The pound traded at $1.2481, compared with $1.2559 late Monday.

In other currency trading, the South African rand sank after Bloomberg News reported that President Jacob Zuma told several of his political allies that he's considering firing popular Finance Minister Pravin Gordhan. The currency also weakened sharply against the dollar on Monday following reports Zuma had ordered Gordhan to return home from an international investor roadshow. The rand traded at 12.96 to the dollar on Tuesday, compared with 12.74 late Monday in New York.

Read:South Africa's currency, stocks plunge as finance minister clashes with president (http://www.marketwatch.com/story/south-africas-currency-stocks-plunge-as-finance-minister-clashes-with-president-2017-03-27)

(END) Dow Jones Newswires

March 28, 2017 13:24 ET (17:24 GMT)