The US dollar fell after US inflation data showed that rising consumer prices cooled off in July, while settling at historical highs, putting some pressure on the Federal Reserve regarding the timing of reducing asset purchases used to support the economic recovery.
The CPI rose by 0.5% last month after jumping by 0.9% in June, and on yearly basis, the CPI rose by 5.4%. Excluding volatile food and energy components.
The Federal Reserve had said that it expected inflationary pressures to decline over time as supply kept pace with demand after months of shutdown due to the spread of the pandemic.
The dollar index, which measures the US currency against a basket of other major currencies, fell to its lowest level since the beginning of trading today at 92.85, after reaching its highest level since April earlier today at 93.13.
On the other hand, the euro rose against the dollar to the levels of 1.1748, after 6 consecutive days of declines reaching its lowest levels this year, but it is still trading below the levels of the daily moving averages. Also, the British Pound rose from its lowest in two weeks against the US Dollar and trading near the 1.3880 levels. Also, the Japanese Yen rose after 5 consecutive days of losses against the Dollar.
The US Senate passed President Biden's infrastructure package, bolstering market expectations of increased US Treasury issuance at a time when the Federal Reserve is expected to announce its intention to reduce its US Treasury purchases.