The US Dollar faced downward pressure on Wednesday, with the dollar index hovering around 98 after a previous session decline. Inflation data reinforced expectations of a Federal Reserve interest rate cut in September, while comments from the White House regarding the Fed Chair added to concerns and impacted the greenback’s performance against major currencies.
- The dollar index hovered around 98.
- US inflation data bolstered expectations for a Federal Reserve interest rate cut next month.
- Headline inflation was unchanged at 2.7%.
- Core inflation edged up to 3.1%, its highest level in six months.
- Traders are pricing in a 94% probability of a 25-basis-point cut in September.
- President Trump is considering legal action against Fed Chair Jerome Powell.
- The dollar held losses against the euro and sterling.
- The dollar recovered some ground versus the yen, Australian and New Zealand dollars.
The US Dollar’s value is being heavily influenced by expectations of monetary policy easing and political considerations. Lower interest rates generally weaken a currency. Simultaneously, uncertainty surrounding the independence of the central bank introduces further volatility and diminishes investor confidence in the dollar’s stability. While it showed resilience against some currencies, the overall sentiment points towards continued pressure on the dollar in the near term.