FX.co ★ Dollar Holds Losses on Dovish Fed Bets

On Wednesday, the dollar index remained around 98 following a decline in the previous session. This movement came after recent US inflation figures heightened expectations for a Federal Reserve interest rate cut in the coming month. Contrary to forecasts predicting an increase due to tariff impacts, headline inflation held steady at 2.7%, while core inflation rose to 3.1%, marking its highest level in six months. Currently, traders are anticipating a 94% likelihood of a 25-basis-point rate cut in September, with an additional cut expected before the end of the year. In parallel, the dollar faced downward pressure after White House spokeswoman Karoline Leavitt indicated that President Donald Trump is contemplating legal proceedings against Fed Chair Jerome Powell over his management of renovations at the central bank’s headquarters, sparking concerns over the Fed's autonomy. The dollar sustained losses against the euro and the pound but regained some strength against the yen and currencies linked to commodities, like the Australian and New Zealand dollars.