The Euro and Mexican Peso both reversed earlier gains following the release of a softer-than-expected US inflation report for July. According to FX Street, the Euro retreated from a two-day high of 1.1563 against the US Dollar as the inflation data triggered a repricing of expectations for a less aggressive Federal Reserve rate hike path through 2026.
Similarly, the Mexican Peso appreciated against the US Dollar on Wednesday to levels last seen in May 2024. FX Street noted that this move trimmed market bets on a Fed rate increase at its upcoming meeting, reflecting cautious sentiment amid the benign inflation figures.
For Japanese investors, these currency moves highlight the ongoing global impact of US monetary policy shifts, which remain a critical factor for FX and equity markets in Japan, especially as the Bank of Japan continues its own policy deliberations.