US inflation slows to 3.4% in July, yet the dollar gains as markets reassess Fed policy expectations amid yen pressure.
The US dollar extended gains despite cooling inflation, defying expectations of a pullback. July consumer prices rose 3.4% year-over-year, down from 3.5% in June, while core inflation fell to 2.5% from 2.6%.
The decline in inflation had been expected to ease dollar strength, particularly as Fed rate hike bets faded. However, the yen continued to weaken, signaling potential intervention risks or shifting market dynamics.
Markets are now reassessing the Fed’s policy path, with the dollar’s resilience suggesting lingering concerns over global growth or safe-haven demand.