Dollar Retreats as US Inflation Data Falls Short of Expectations

The US dollar retreated against major currencies on Wednesday after data showed a smaller-than-expected increase in US inflation. The Personal Consumption Expenditures Price Index, the Federal Reserve's preferred inflation gauge, rose 0.3% last month, lower than the 0.4% forecast by economists polled by Reuters.

The dollar had been strengthening on growing expectations of more Fed rate hikes amid inflation driven by higher oil prices. However, the data led to a reduction in market bets on an interest rate hike from the Federal Reserve.

The euro rose 0.19% to $1.1361, while the single currency is still headed for a monthly loss against the dollar after two consecutive months of gains. The dollar index fell 0.23% to 101.17, but it is still on track for a monthly gain in September.