U.S. Dollar Extends Fall Amid Fed Rate Cut Speculation

(RTTNews) - The U.S. dollar continued to trade lower against other major currencies in the European session on Wednesday, as the U.S. Consumer Price Index data from July has raised expectations that the Fed would lower interest rates in September.

U.S. Treasury Secretary Scott Bessent wants the Fed to keep the door open to a larger, 50 basis-point rate cut next month following recent weak job growth revisions.

European stock markets traded higher amid expectations of a rate cut by the Federal Reserve next month, and on hopes that the impact of tariffs on growth will be less severe than feared earlier.

The CME FedWatch tool shows that markets are now putting in almost 94% odds of a Fed rate drop at the September meeting, up from 86% a day earlier. The Fed Governor Michelle Bowman said last week that three rate cuts this year are probably warranted.

On Tuesday, the USD traded lower against its major peers.

In the European trading today, the U.S. dollar fell to more than a 2-week low of 1.1726 against the euro, nearly a 3-week low of 1.3571 against the pound and a 5-day low of 147.18 against yen from early highs of 1.1671, 1.3493 and 148.17, respectively. The greenback may test support around 1.19 against the euro, 1.38 against the pound and 145.00 against the yen.

Against the Swiss franc, the Australia and the New Zealand dollars, the greenback slid to more than 2-week lows of 0.8024, 0.6558 and 0.5993 from early highs of 0.8072, 0.6516 and 0.5945, respectively. If the greenback extends its downtrend, it is likely to find support around 0.79 against the franc, 0.67 against the aussie and 0.60 against the kiwi.

The greenback edged down to 1.3754 against the Canadian dollar, from an early high of 1.3782. On the downside, 1.35 is seen as the next support level for the greenback.

Looking ahead, U.S. MBA mortgage approvals data and U.S. EIA crude oil data are slated for release in the New York session.