FX.co ★ Dollar Holds Decline as Inflation Cools

The US dollar index remained around 100.9 on Wednesday, following a nearly 1% decline in the previous session. This decrease was influenced by inflation data that fell short of expectations, suggesting that President Donald Trump’s tariffs have had only a minimal effect. Reports from Tuesday indicated that headline inflation dropped to 2.3% in April, marking its lowest point since February 2021 and slightly under market predictions of 2.4%. In terms of trade, markets are continually evaluating the impact of a temporary reduction in US-China tariffs, which will lower tariffs to 30% and 10%, respectively, for a 90-day period. This easing of trade tensions has led traders to lessen their expectations for significant Federal Reserve interest rate cuts, as they anticipate that policymakers might maintain greater flexibility if inflation risks continue to diminish. Looking forward, investors are turning their attention to this week's upcoming retail sales and producer inflation data to gain further insights into the health of the US economy.