The US dollar extended its decline on Wednesday, tumbling from a two-week high as softer-than-expected inflation data further eroded market confidence in a near-term Federal Reserve interest rate hike.
The currency’s weakness marks a continuation of a broader sell-off, with the greenback on track to record its largest weekly loss in 12 weeks.
The latest inflation print adds to the downward pressure already triggered by a disappointing June jobs report, which had significantly dampened expectations for further monetary tightening.
With both labor and price data pointing to a cooling economy, traders are repricing the probability of an imminent rate increase, shifting focus toward the potential for a more dovish policy stance.
Despite the softening domestic data, geopolitical risks remain a wildcard.
Concerns over escalating tensions involving Iran continue to linger in the background, providing a counterweight to the dollar’s decline.