The US dollar is heading for its first monthly loss since December as easing inflation pressures reinforce expectations that the Federal Reserve will cut interest rates before the end of the year.
The Bloomberg Dollar Spot Index fell more than 1% in May, with the currency losing ground against all its major peers. Even the yen, which fell for four months in a row, rose in May thanks to a record $62 billion intervention by Japanese authorities.
The dollar’s turnaround came after Fed Chairman Jerome Powell dismissed concerns that the central bank could raise rates again, while a slightly smaller-than-expected rise in the consumer price index eased fears about inflation. That marked a break from much of this year, when the dollar rose along with U.S. bond yields as rate cuts were priced out of the market.
