Dollar edges lower against euro as markets trim US rate hike bets

The greenback faces selling pressure amid US economic growth worries and the Federal Reserve’s response to weak data.

The dollar slipped against the euro and Swiss franc on Monday after US economic indicators fell short of expectations. Traders are reducing their expectations of interest rate hikes from the Federal Reserve following weaker-than-anticipated data. The euro reached a two-month high against the dollar at approximately US$1.1578, up 0.08% for the day.

Treasury data indicated a decline in July retail sales for the first time in nine months, alongside unexpected job losses and moderate inflation. The Federal Reserve's chances of raising rates at their September meeting have dropped from 52.2% to 30.6%, according to the CME FedWatch tool. Traders are expecting a significant net dollar long position to be unwound by the end of August.

The yen weakened slightly despite intervention from the US and Japan, while the dollar index remained stable.

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