Dollar languishes as focus turns to CPI, Fed speakers

The dollar struggled on Wednesday as traders awaited fresh clues on when interest rate hikes might occur amidst high inflation. The greenback fell from an 18-month peak the day before as oil prices dropped and market participants re-evaluated the AI-driven rally boosting demand for US assets. The euro maintained its gains as French budget worries kept regional bond yields high and markets on edge.

Focus now shifts to the release of US consumer price index data along with remarks from Federal Reserve officials that could shed light on the path of interest rates. There is concern that core CPI may surprise on the upside due to robust consumer demand and higher prices, driving up market expectations for an October Fed rate increase and the USD, according to Carol Kong, a currency strategist at Commonwealth Bank of Australia.