US Dollar Retreats as Inflation Data Cools, Easing Fed Rate Hike Expectations

The US Dollar weakened against major currencies on Friday, driven by softer inflation data that tempered expectations for further Federal Reserve rate hikes. The US Dollar Index traded around 99.90 during Asian hours, marking a second consecutive day of losses, according to FX Street.

Currency pairs reflected this shift, with the British Pound advancing to near 1.3495 against the US Dollar in early European trading hours, FX Street reported. Meanwhile, the Euro continued its recovery during the Asian session, building on a bounce from the key 1.1500 psychological level.

The easing of US inflation pressures and the resulting decline in Fed tightening bets are likely to influence Japanese investors closely, given the ongoing sensitivity of the yen to US monetary policy and the impact on cross-asset flows in FX and equities.