Dollar Falls as Powell Hints at Potential Rate Cuts

Summary:
The U.S. dollar dipped on Wednesday after Federal Reserve Chair Jerome Powell indicated the central bank is nearing a point where it might cut interest rates but emphasized the need for further declines in inflation. This comes ahead of Thursday’s consumer price index (CPI) data, which is expected to show a slight easing of headline prices annually. Economists predict a 0.1% rise in headline prices and a 0.2% gain in core prices for June. Powell’s recent comments to Congress highlighted the cooling labor market and the balanced risks facing the economy, suggesting potential rate cuts by September. The dollar’s future performance will depend on the actions of other central banks. The dollar index was down slightly, with the euro and sterling both gaining. The Japanese yen weakened due to interest rate differentials, and the New Zealand dollar dropped as the Reserve Bank of New Zealand hinted at possible rate cuts. Bitcoin also fell by 0.57%.