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The US dollar declines in early European trading on Thursday ahead of the release of a key inflation report later in the day, while strong growth data has boosted sterling.
At 10:00 a.m. ET (10:00 a.m. ET), the dollar index, which tracks the dollar's performance against a basket of six other major currencies, was down 0.2% at 104.552, its lowest level since mid-June. .
The dollar falls while waiting for the CPI data
The dollar retreats this Thursday, extending losses recorded overnight, after Federal Reserve Chairman Jerome Powell reiterated his prospects that the US economy will achieve a soft landing.
Powell also stated, during the second day of his semiannual appearance before Congress on Wednesday, that the Fed does not need inflation to fall below its 2% target to begin cutting rates, just that the bank needed enough confidence when inflation was easing.
Thus, the imminent June CPI report is in the center of attention and any sign of easing inflation could fuel bets on a rate cut.
The CME Fedwatch tool has shown that traders maintain a 72.5% probability that the Fed will cut rates by 25 basis points in September.
Analysts at ING (AS:INGA) note in a note that "we have a slight bias in favor of a weaker dollar today, given the recent bearish market trend, even though there is still no conclusive evidence of a cut in September ".
"We suspect such a bias is partly a consequence of Fed Chair Jerome Powell's provisionally cautious departure from the FOMC's latest dot plot projections, which include only a cut in 2024."