Investing.com – Global foreign exchange bourses traded with a softer tone toward the greenback on Wednesday, as the U.S. dollar languished below its recent 18-month peaks, giving way to minor recoveries in the euro and sterling as currency traders awaited fresh interest rate catalysts.
The U.S. Dollar Index, which tracks the greenback against a basket of six major peers, slipped 0.1% to trade at 102.09. The pullback extends Tuesday’s 0.4% decline after the index touched its highest valuation since April 2025 earlier in the week.
Currency desks attributed the dollar’s pause to a subtle shift in tone from Federal Reserve officials, combined with pre-data positioning ahead of Wednesday’s pivotal Consumer Price Index (CPI) readout and the release of the Fed’s Beige Book.
Euro rebounds to $1.1208 as Lagarde dashes French bailout hopes
The single currency caught a modest bid in European trade, edging up 0.1% to $1.1208 and recovering from multi-month lows near $1.1100.
The euro’s uptick came after European Central Bank President Christine Lagarde firmly played down speculation that Frankfurt would intervene to prop up France’s ailing sovereign bond market.
Speaking on the sidelines of the IMF and World Bank meetings to Reuters, Lagarde explicitly stated that Parisian lawmakers must address their projected 5.4% GDP budget deficit through domestic fiscal consolidation rather than expecting ECB backstops via emergency bond-buying tools.
Not finding the right stocks? Our AI’s list of investor-grade stock picks for October just dropped »
While Lagarde’s refusal to act as a lender of last resort underlines ongoing fiscal risk in French paper, her hawkish refusal to expand the ECB’s balance sheet removed immediate fears of monetary dilution, offering technical support to the single currency.
Fed speakers turn dovish as markets await CPI and Beige book
The dollar’s retreat gained momentum following Tuesday’s remarks from New York Fed President John Williams and Fed Governor Christopher Waller, which markets interpreted as dovish.
Both officials highlighted the need to carefully calibrate future policy moves against tightening financial conditions and elevated 10-year Treasury yields lingering near 5.20%.
Economists expect headline inflation to accelerate to 3.6% year-on-year in September from 3.4% in August. Money markets currently price roughly a 78% probability that the Fed will leave interest rates unchanged at its late-October meeting, with an 85% chance of a final 25-basis-point hike in December.
