Dollar Weakness Hits Five-Day Low as Trump Calls Off Strikes and Fed Rates Drop

The US dollar is weakening for a fifth straight session, hitting its lowest levels since mid-June. This drop in value comes after President Trump called off planned strikes on Middle Eastern targets, citing progress toward an agreement on reopening the Strait of Hormuz and winding down a nuclear program.

The Federal Reserve's rate expectations have also contributed to the dollar's decline. Markets have lowered the odds of a September rate hike from 77% to below 65%, signaling growing investor concern about the long-term sustainability of US debt, which has risen by $3.6 trillion over the past year.

The euro is holding firm around 1.1500, hitting fresh highs since mid-June. This strength is driven by broad dollar weakness and eurozone inflation data, with the preliminary annual consumer inflation figure for July unexpectedly accelerating from 2.8% to 2.9%, while core inflation beat forecasts at 2.5%.

The British pound, on the other hand, looks subdued despite broad dollar weakness, trading around 1.3470 as fading tension in the Middle East reduces demand for safe haven assets.