The U.S. dollar slipped lower on Thursday morning as markets await the release of U.S. consumer monthly inflation later in the day. With analysts expecting inflation to continue cooling, investors are hopeful that the Federal Reserve will introduce interest rate cuts as early as March.
The dollar index slipped 0.1%, reversing from its rally last week, while the euro rose 0.1% against the greenback to $1.0978. The British pound gained 0.2% against the dollar, standing at $1.2764. While the Japanese yen has slumped following weak Japanese wage data, the currency held steady against the dollar, which fell 0.25% to 145.39 yen.
According to future markets, investors are expecting a total of 140 basis points in rate cuts this year, pricing a two-thirds chance that they will begin in March. Still, some experts believe that markets may be getting ahead of themselves. “In our view, investors are still too optimistically positioned for Fed rate cuts,” Rabobank senior FX strategist Jane Foley commented in a note to investors.