Dollar Finds Support Amid Broad-Based Weakness

The pound fell on Wednesday while the euro held steady as the dollar found some support after its previous session's broad-based weakness. The dollar index slipped 0.05% to 1.3534, with the euro flat at 1.1625 as of 06:05 ET (10:05 GMT).

Chris Turner, Global Head of Markets and Regional Head of Research for UK & CEE at ING, noted that the dollar's failure to capitalize on supportive fundamentals is a main talking point in currency markets.

Turner pointed out that despite higher energy prices due to an escalation in the Gulf directing more trade flows towards the US at the expense of Europe and Asia, the greenback has failed to rally. He attributed this to a fragile global macro hedge fund position for a downside break of 150 over the coming months and a tight negative correlation between elevated global equities and the dollar.

The market is awaiting Friday's August CPI report, which ING expects will be 'the final piece of the puzzle' for the Fed's policy decision next week. The bank forecasts a 25 basis-point rate hike.