FX.co ★ U.S. Dollar Drops On Hopes Of Interest Rate Peak

The U.S. dollar weakened against its most major counterparts in the European session on Tuesday, as comments from several Fed officials indicated that the central bank is nearing the end of the tightening cycle.

Several Fed officials said on Monday that higher interest rates are needed to reach the 2 percent inflation target, but the end of the current monetary policy tightening cycle is getting close.

U.S. inflation data, due on Wednesday, is expected to show that price pressures moderated further in June.

The CPI is forecast to ease to 3.1 percent from 4 percent in May.

The benchmark yield on the 10-year note fell to 3.96 percent. Yields move inversely to bond prices.

The greenback fell to a 2-1/2-year low of 0.8810 against the franc, more than 1-year low of 1.2934 against the pound and more than a 3-week low of 140.15 against the yen, from its prior highs of 0.8856, 1.2853 and 141.46, respectively. The greenback is likely to challenge support around 0.86 against the franc, 1.32 against the pound and 134.00 against the yen.

In contrast, the greenback rose to 1.0993 against the euro and 1.3281 against the loonie, off an early more than 2-month low of 1.1027 and a 6-day low of 1.3244, respectively. The greenback is seen finding resistance around 1.085 against the euro and 1.34 against the loonie.

The greenback edged up to 0.6661 against the aussie and 0.6182 against the kiwi, from an early low of 0.6694 and a multi-week low of 0.6224, respectively. The greenback may find resistance around 0.64 against the aussie and 0.60 against the kiwi.