The dollar index slipped below 101 on Wednesday, extending losses for a second straight session after softer-than-expected US inflation data tempered expectations of a near-term Federal Reserve rate hike.
The annual US inflation rate slowed to 3.5% in June from 4.2% in May, undershooting forecasts of 3.8%, as lower oil prices helped ease energy-related price pressures. On a monthly basis, consumer prices declined 0.4%, marking their first monthly drop since 2020.
In testimony before Congress on Tuesday, Fed Chair Kevin Warsh reaffirmed the central bank’s determination to restore price stability but stopped short of signaling a more hawkish policy stance.
Futures markets continue to assign roughly a 50% probability to a Fed rate hike in September, as renewed tensions between the US and Iran have pushed oil prices higher and kept inflation risks in focus.
