Euro Hits Seven-Month High Amid Fed Rate Cut Bets

The euro surged to a seven-month high against the dollar as traders anticipated U.S. inflation data that could confirm expectations of the Federal Reserve cutting interest rates. Meanwhile, global currencies saw varied movements amid fluctuating economic data and policy decisions, influencing market sentiment and financial expectations.

The euro climbed to a seven-month high against the dollar on Wednesday, driven by traders' expectations that upcoming U.S. consumer prices data would confirm the Federal Reserve's trajectory towards an interest rate cut next month. Surpassing last week's peak and trading at levels last seen on January 2, the euro rose by as much as 0.3% to $1.1029, settling at $1.1023.

The dollar dipped against multiple currencies ahead of the U.S. Consumer Price Index (CPI) data release, anticipated to show a 0.2% increase in July from a previous 0.1% decline. FX analyst Volkmar Baur highlighted the market's risk positioning, noting that any upside surprise in CPI could buoy the dollar once more.

Despite weaker producer price inflation data, traders were increasingly betting on a substantial rate cut by the Federal Reserve next month. Concurrently, sterling dipped following softer-than-expected British CPI data, while New Zealand's kiwi and Japan's yen saw respective declines tied to domestic economic metrics and political developments.

(With inputs from agencies.)