Hence, any unanticipated weaknesses in the upcoming inflation and retail sales numbers are bound to intensify expectations of a Fed rate cut.
- Downward break of 96.50 a green light for GBP, EUR gains.
Food prices jumped 0.3 percent last month, but the energy index tumbled 0.6 percent, with gasoline falling 0.5 percent in May.
Apparel prices were unchanged after two steep declines.
"Market pricing can go up and down so we can't be handcuffed to that". Today, the USA will release the inflation numbers. -China trade war in that he controls China's central bank while Trump must deal with a Federal Reserve that is "very destructive to us".
The central bank, whose political independence is seen as key to economic stability, is under pressure amid the Trump administration's ongoing trade wars and other signs of potential economic weakness.
"So the market is waiting for next week's Fed meeting as a chance to see by how much and for how long it is ready to ease policy".
Above: Dollar index shown at daily intervals, alongside Euro-to-Dollar rate (blue line, left axis).
The retail sales figures will be just as, if not more important. "When he took office, Trump had stressed that a weaker dollar was necessary to create US employment".
The Pound-to-Dollar rate was 0.11% higher at 1.2737 but is down 0.02% for 2019 after having fallen 2% in the last month. Non-alcoholic beverages increased 1.2% last month.More news: Uganda confirms 1st Ebola case outside outbreak in Congo
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The Fed raised rates four times previous year, with the last hike in December putting the federal funds rate in the 2 ¼ to 2 ½% range.
John Doyle, vice president of dealing and trading at Tempus Inc, a foreign exchange market specialist, said: "We are likely seeing the beginning of coordinated Fed-speak to prep market participants for at least one rate cut this year".
"The market has priced in a rate cut by the Fed to a significant degree", said Shinichiro Kadota, senior strategist at Barclays in Tokyo.
A note of caution is warranted, though, as the forthcoming data may not provide a clear enough direction for traders, and with the next Fed policy meeting a week away on June 18-19, some investors may choose to sit on the sidelines until then.
Stock markets across United States witnessed a spurt early this week on rumors that Federal Reserve may announce a rate cut which put fears of escalating trade war of U.S. with its trading partners on the back seat.
Inflation has been consistently muted, slightly below or near the Federal Reserve's target of 2% even though the economy is poised in July to set the record for the longest expansion in USA history.
Capital flows tend to move in the direction of the most advantageous or improving returns, with lower rates normally seeing investors driven out of and deterred away from a currency while rising rates have the opposite effect.
President Donald Trump lashed out at the Federal Reserve in a series of tweets Tuesday morning, saying that currencies including the euro are devalued against the dollar and that interest rates should be lower.
Micron Technology Inc, Applied Materials Inc and Lam Research Corp fell about 5% and were the top losers among S&P 500 companies. In April, he said the Fed should return to quantitative easing, a financial-crisis-era policy that injected trillions of dollars into the economy.