Dollar Tumbles Amid Rate Hike Uncertainty and Mideast War Fears

The US dollar remained near multi-month lows against most major currencies on Tuesday as traders reduced their expectations of near-term monetary tightening.

This shift in sentiment comes after data showed that US retail sales fell in July for the first time in nine months, following unexpected job losses last month and mild inflation readings.

Nohshad Shah, head of EMEA fixed income sales at Citadel Securities, said 'inflation has been above target for most of the past five years, and whilst a high 2% annual pace may prove acceptable to the Fed, it leaves the inflation process with little to no breathing room in a world of constant supply shocks.'

The risk of an escalation in the Middle East war also weighed on sentiment, with Iran shifting to a 'fully offensive' military posture due to stalled negotiations with the US.