Dollar Slips Amid Economic Uncertainty and Fed Speculation

The U.S. dollar eased against the euro as U.S. inflation data supported the case for a Federal Reserve rate cut next month. Market expectations of a rate reduction grew after weak payrolls data and moderate price pressure readings. Speculation around Fed leadership changes also added to market volatility.

The dollar slipped against the euro on Tuesday following moderate gains in U.S. consumer prices for July. This shift supports the likelihood of a Federal Reserve interest rate cut next month. The Bureau of Labor Statistics reported the consumer price index rose by 0.2% last month, meeting economists' expectations.

Karl Schamotta, chief market strategist at Corpay, noted that underlying inflation remains subdued, allowing policymakers room to maneuver as they assess the U.S. labor market. Consequently, the Fed might consider a rate cut when Chair Powell speaks at the Jackson Hole Economic Symposium later this month.

Meanwhile, James Bullard expressed willingness to lead the Fed, adding to market speculation. Amid global economic uncertainties, the impact of tariffs on growth remains a wild card, challenging predictions for the dollar's trajectory through year's end.

(With inputs from agencies.)