The US dollar weakened on Wednesday, October 14, retreating from an 18-month high as currency traders awaited fresh US inflation data and comments from Federal Reserve officials for clearer signals about the direction of interest rates.
The dollar index, which measures the US currency against a basket of major currencies, edged lower to around 102.16 after declining 0.35% in the previous session.
The retreat followed easing oil prices earlier in the week and a reassessment of demand for US assets following the strong rally in technology-related investments.
Investors are closely monitoring the September US Consumer Price Index, with economists expecting monthly inflation of 0.6% and annual inflation of 3.6%, compared with 3.4% in August.
Market expectations currently indicate a 77% probability that the Federal Reserve will leave interest rates unchanged at its October meeting, although persistent inflation could influence future policy decisions.
Meanwhile, the euro edged higher to approximately $1.1203, supported by a modest recovery against the dollar despite continuing concerns over France's fiscal outlook.
The Japanese yen remained relatively stable near 158.32 per dollar, while sterling also recorded limited gains.
The next inflation figures and Federal Reserve communications are expected to be key drivers of short-term currency movements, particularly as traders reassess the likelihood and timing of further monetary tightening.
