FX.co ★ US Dollar Index Swings Lower after CPI

The US dollar index decreased to 98.3 on Tuesday, continuing its downward trend after reaching a two-month peak of 100 on July 31st. This movement aligns with recent economic data that have strengthened forecasts of the Federal Reserve implementing a rate cut in September. The overall inflation rate held steady at 2.7%, slightly beneath the anticipated 2.8%. However, core inflation climbed to a six-month high of 3.1%. In response, rate traders increased their expectations of a 25 basis point rate cut at the Fed's upcoming meeting, following significant downward revisions to payroll figures and unfavorable ISM PMIs, which placed additional pressure on the dollar relative to other G10 currencies. Concurrently, President Donald Trump extended the ceasefire in the US-China trade dispute by an additional 90 days to facilitate further negotiations. Meanwhile, further declines in the DXY (US Dollar Index) were mitigated by weak payroll figures in the UK.