The US dollar index held around 100.9 on Wednesday, after falling nearly 1% in the previous session, pressured by weaker-than-expected inflation data that only hinted at a limited impact from President Donald Trump's tariffs.

The data released Tuesday showed headline inflation eased to 2.3% in April, the lowest level since February 2021, and slightly below market expectations of 2.4%. On the trade front, markets continued to assess the implications of a temporary lifting of US-China tariffs, which would see tariffs reduced to 30% and 10%, respectively, over a 90-day period.

The easing trade tensions have prompted traders to temper expectations for aggressive Federal Reserve interest rate cuts, with policymakers believing they can retain more flexibility if inflation risks continue to ease. Looking ahead, investors are focused on upcoming retail sales and producer inflation data later this week for further signals on the health of the US economy.(Newsmaker23)

Source: Trading Economics