Dollar fell in European trade on Wednesday against a basket of major rivals, extending losses for the second straight day away from a three-week high on profit-taking, as investors shun new orders ahead of major US inflation data.
Upcoming US consumer prices data will showcase the progress made by the Federal Reserve in its fight with inflation.
The Index
The dollar index fell 0.2% to 102.18, with a session-high at 102.36, after falling 0.15% yesterday away from a three-week high at 103.1.
New York Fed President John Williams said it's too early to talk about interest rate cuts as inflation hasn't reached 2% yet.
US Rates
Current pricing for a US 0.25% interest rate cut at the Fed March meeting stands at 65%, while pricing for such a cut at the May meeting stands at 95%.
Inflation Data
Now investors await mainline US consumer prices data for December later today, which is expected to impact the future path of monetary policy.
US consumer prices are expected to rise 3.2% y/y in December, compared to a 3.1% rise in November, while core consumer prices are expected up 3.8% y/y.
Investors remain highly optimistic about future prospects this year as the Fed looks set to cut interest rates multiple times, boosting growth and the stock market.
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