U.S. Dollar Extends Slide On Expectations Of Fed Pause

(RTTNews) - The U.S. dollar weakened against other major currencies in the European session on Tuesday amidst expectations of an end of the Fed's monetary tightening cycle in the monetary policy meeting held next week.

Traders expect the Fed to raise rates by 25 basis points in the review in July, but the markets expect a pause of the FOMC tightening cycle after the release of inflation data last week.

Data released on Wednesday had shown annual consumer price inflation falling to 3 percent in the month of June, versus 4 percent in the previous month and expectations of 3.1 percent.

Markets are now waiting for the release of U.S. retail sales and industrial production data, due later in the day, for more signals on the path of U.S. interest rates.

The U.S. dollar started falling from 6th of July.

In the European trading today, the U.S. dollar fell to nearly a 1-1/2-year low of 1.1276 against the euro and a 4-day low of 0.8568 against the Swiss franc, from early highs of 1.1231 and 0.8607, respectively. If the greenback extends its downtrend, it is likely to find support around 1.14 against the euro and 0.83 against the franc.

Against the pound the yen, the greenback edged down to 1.3107 and 138.21 from early highs of 1.3068 and 138.92, respectively. On the downside, 1.32 against the pound and 133.00 against the yen are seen as the next support levels for the greenback.

Looking ahead, Canada CPI, PPI and raw material prices data, U.S. retail sales data, industrial production, manufacturing production, all for June, are slated for release in the New York session.

At 9:00 am ET, Federal Reserve Vice Chair for Supervision Michael Barr is scheduled to speak on "Fair Lending Practices" before the National Fair Housing Alliance 2023 National Conference - 1, in Washington D.C., U.S.

At the same time, Federal Reserve Division of Supervision and Regulation Director Michael Gibson will testify on "Climate Risk" before the House Financial Services subcommittee on Financial Institutions and Monetary Policy, in Washington D.C., U.S.