USD weakens broadly as ECB holds steady, US inflation meets expectations

The US dollar declined across major pairs following a combination of steady ECB policy and in-line US inflation data that reinforced Federal Reserve rate cut expectations. The European Central Bank maintained interest rates unchanged, citing improving eurozone conditions, which supported the euro's relative strength. US CPI data matched forecasts while jobless claims unexpectedly increased, adding to evidence of cooling labor markets and supporting dovish Fed bets. EUR/USD capitalized on the dollar weakness, breaking above key technical levels as traders positioned for potential Fed policy easing. The greenback's broad-based retreat extended to other major pairs, with commodity currencies particularly benefiting from the risk-on sentiment. Market positioning suggests further dollar weakness possible if upcoming Fed communications maintain a dovish tone, with traders closely monitoring support levels across major USD pairs.