Dollar Slips as Soft CPI Fuels Rate-Cut Bets; Trump Comments Add Pressure

The dollar weakened Wednesday after subdued U.S. inflation reinforced expectations of a Federal Reserve rate cut next month, while fresh political pressure from President Donald Trump further weighed on sentiment.

July CPI rose only marginally, matching forecasts and showing limited tariff pass-through to consumer prices. Traders priced in a 98% probability of a September Fed cut, sending the dollar index (DXY) down to 98.02, extending Tuesday’s 0.5% drop.

The euro rose 0.1% to $1.1684, the yen held at 147.95 per dollar, and sterling edged up to $1.3505. U.S. Treasury yields also eased, with the 2-year at 3.7348% and the 10-year at 4.2829%.

Trump rattled markets further after the White House said he may sue Fed Chair Jerome Powell over central bank renovations, renewing tensions over Fed independence. The president also criticized Goldman Sachs CEO David Solomon for predicting tariffs would damage the economy.

In the Asia-Pacific, the Australian dollar firmed to $0.6531 and the kiwi to $0.5957 after the RBA cut rates and signaled possible further easing.

Crypto markets were mixed: bitcoin slipped 0.7% to $119,337, while ether surged to $4,679, its highest in nearly four years, driven by “real-world adoption and capital confidence,” according to OKX’s Singapore CEO Gracie Lin.