The US Dollar weakened against major currencies on Monday as investors awaited the US Consumer Price Index (CPI) release amid uncertainty surrounding Federal Reserve policy and broader global factors. The EUR/USD pair traded steadily around 1.1553, showing little movement on the day, according to FX Street (Euro holds ground against US Dollar amid Fed uncertainty ahead of US CPI).
Market expectations for a Fed rate hike in September have softened, contributing to the dollar’s decline. Wee Khoon Chong from BNY highlighted that the US Dollar was the weakest G10 currency on iFlow metrics as traders scaled back their bets on a September rate increase, reflecting a more cautious Fed outlook.
Meanwhile, ING’s Francesco Pesole emphasized that softer US economic data and a dovish Fed stance are likely to benefit the Japanese Yen, which remains highly sensitive to interest rate changes. Pesole noted the risk of the Yen returning to the 160 level against the US Dollar. This dynamic is particularly relevant for Japanese investors closely monitoring currency movements ahead of upcoming US inflation data and Fed decisions.