The US dollar index remained above 98.5 on Wednesday, hovering near a three-week high as investors awaited the latest Producer Price Index report for further insight into the inflationary impact of the Trump administration’s tariffs. On Tuesday, the greenback rallied after mixed consumer inflation data led traders to scale back expectations for aggressive Federal Reserve rate cuts.
While headline inflation met forecasts on both annual and monthly bases, core inflation came in softer than expected. Dallas Fed President Lorie Logan also signaled a cautious approach, stating that interest rates would likely need to remain unchanged for some time to keep inflation anchored amid tariff-related pressures. Markets responded by lowering the odds of multiple rate cuts this year, with the probability of a September move now seen as only slightly above 50%.
