Dollar Slips as Fed Rate Hike Bets Cool, Yen Gains Despite Weak Japan GDP

The US dollar declined against major currencies on Tuesday as investors scaled back expectations for further Federal Reserve rate hikes. The dollar index, which measures the greenback's value against a basket of six major currencies, fell to 103.50 in early European trading.

This decline came after softer-than-expected US economic data and cautious comments from Federal Reserve officials suggested the central bank may be nearing the end of its tightening cycle.

According to CME Group's FedWatch tool, investors now price a roughly 70% chance that the Fed will hold rates steady at its next meeting in March. This is up from around 50% a week ago, reflecting growing conviction that inflation is cooling enough for the central bank to pause.