The U.S. dollar slipped against its most major rivals in the European session on Tuesday, as a continued rise in commodity prices stoked fears about inflation.

Investors worry that a surge in inflation could prompt the Fed to tighten policy sooner than expected.

The Labor Department will release its latest U.S. CPI data on Wednesday, which is expected to show a rise of 3.6 percent over the year in April.

U.S. inflation expectations soared to the highest in a decade as the economy recovers from the pandemic and on the Fed’s accommodative policy.

The dollar was sold off on speculation that higher inflation could hurt the value of the currency.

Speeches from Fed members, including John Williams and Lael Brainard are due later in the day.

The greenback retreated to 108.67 against the yen, from a high of 108.98 seen at 8:45 pm ET. The greenback may locate support around the 106.00 level.

Data from the Ministry of Communications and Internal Affairs showed that Japan household spending grew 6.2 percent on year in March – coming in at 309,800 yen.

That beat forecasts for an increase of 1.5 percent following the 6.6 percent drop in February.

The greenback edged down to 1.4147 against the pound and 1.2169 against the euro, off its early high of 1.4104 and a 4-day high of 1.2123, respectively. Should the greenback falls further, it is likely to test support around 1.44 against the pound and 1.23 against the euro.

The greenback reversed from its early 4-day highs of 0.7821 against the aussie and 0.7252 against the kiwi, easing off to 0.7853 and 0.7290, respectively. The greenback is poised to challenge support around 0.80 against the aussie and 0.74 against the kiwi.

In contrast, the greenback was up against the franc, at a 4-day high of 0.9033. Next key resistance for the currency is likely seen around the 0.92 level.

The greenback was trading in a positive territory against the loonie, with the pair worth 1.2114. The greenback is seen testing resistance around the 1.25 mark.


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