Dollar Weakens After Soft U.S. Inflation Data Fuels Fed Easing Bets

The U.S. dollar weakened on Wednesday, extending losses after a larger-than-expected overnight decline. This drop followed weaker-than-expected U.S. consumer inflation data. It bolstered the case for Federal Reserve easing amid cooling global trade tensions. U.S. data revealed that the Consumer Price Index (CPI) increased by 0.2% last month. This figure fell short of economists' expectations of a 0.3% gain, following a 0.1% dip in March. The euro rose 0.5% to $1.1240, the pound increased 0.34% to $1.2249, and the dollar declined 0.77% against the Japanese yen to 146.33. The dollar index, which tracks the unit against six main peers, fell 0.45% to 100. ING FX strategist Francesco Pesole noted a clear preference for strategic selling of the dollar ahead of potential U.S. data deterioration. The Korean won strengthened after discussions between South Korea and the U.S. Treasury regarding forex markets. The dollar was last down 1.2% at 1398 won. Looking ahead, April's U.S. retail sales, PPI, and a speech from Fed Chair Powell are significant events. Traders are pricing in rate reductions and expect the next quarter-point cut in September. The U.S. central bank has adopted a wait-and-see approach as it assesses the economic impact of the U.S. tariff campaign.