USD Weakens Across Board on Fed Rate Cut Expectations

The US Dollar Index declined approximately 1.2% during the week ending August 15, with major pairs like EUR/USD and GBP/USD gaining 140 and 165 pips respectively. The weakness was driven by growing Federal Reserve rate cut expectations following benign consumer price growth data, which showed inflation moderating toward the Fed's 2% target. Easing geopolitical tensions and reduced trade tariff uncertainty further pressured the greenback, as risk appetite improved across global markets. Technical indicators suggest the Dollar Index has broken below the key 103.50 support level, opening the path toward 102.80. Fed funds futures now price in a 65% probability of a 25 basis point cut at the September FOMC meeting, up from 40% the previous week. Traders should monitor upcoming US retail sales and jobless claims data, as weaker readings could accelerate dollar selling and push EUR/USD toward 1.1000 resistance.