Dollar Decline Boosts Euro as Inflation Trends Downward

The U.S. dollar weakened against its major peers on Wednesday, pushing the euro to an eight-month high. This shift followed U.S. consumer price index data that signaled slowing inflation, bolstering expectations for imminent Federal Reserve interest rate cuts. The CPI rise in July moderated, with the annual increase falling below 3% for the first time since early 2021, reinforcing predictions for a rate cut in September.

The U.S. dollar weakened against its major peers on Wednesday, pushing the euro to an eight-month high. This shift followed U.S. consumer price index data that signaled slowing inflation, bolstering expectations for imminent Federal Reserve interest rate cuts.

The CPI rise in July moderated, with the annual increase falling below 3% for the first time since early 2021. This added to expectations for a rate cut next month, although likely less aggressive than previously anticipated.

The euro climbed 0.4% against the dollar to $1.1031, surpassing last week's high and reaching its strongest level since January 2. The dollar index fell 0.2% to 102.4. Traders are now betting on a potential 50 basis-point cut in September.

(With inputs from agencies.)