U.S. Dollar Falls 0.2% on Week as Inflation Cools, Dampening Fed Rate Hike Expectations

The U.S. dollar declined on the week ending July 17, as cooler inflation data tempered market expectations for near-term Federal Reserve rate increases. The Dollar Index (DXY) closed slightly unchanged on Friday at 100.77, posting a weekly loss of 0.2%. Latest U.S. economic reports showed easing price pressures: June consumer price index (CPI) and producer price index (PPI) monthly rates both slowed, while the University of Michigan survey revealed consumer confidence reached its highest level since February, with one-year inflation expectations declining further. These readings suggested the Fed faces no urgent need to raise rates, pressuring dollar strength. However, escalating U.S.-Iran tensions pushed oil prices sharply higher, rekindling inflation concerns, while several Fed officials cited AI-related demand as an upward price factor.
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