The dollar weakened against a basket of major currencies on Tuesday, as investors scaled back expectations for further interest rate hikes by the Federal Reserve this year. Recent economic data, including weaker-than-expected inflation figures, has led to increased uncertainty about the Fed’s policy path.

Factors Contributing to Dollar Weakness

• Disappointing Inflation Data: Inflation has remained stubbornly below the Fed’s 2% target, raising concerns about the strength of the U.S. economy.
• Global Growth Concerns: Uncertainty surrounding global economic growth has also weighed on the dollar, as investors seek safe-haven assets.
• Geopolitical Risks: Rising geopolitical tensions have further contributed to risk aversion, benefiting currencies like the Japanese yen and the Swiss franc.

Analyst Commentary

“The market is starting to price in a lower probability of another rate hike this year,” said [Analyst Name], chief currency strategist at [Firm Name]. “The dollar is likely to remain under pressure until we see a significant improvement in economic data.”

Impact on Other Markets

The weaker dollar provided a boost to commodity prices, as they became more affordable for buyers using other currencies. U.S. stocks also edged higher, as a weaker dollar can benefit multinational companies by making their products more competitive in international markets.

Looking Ahead

Investors will be closely watching upcoming economic data releases, including the monthly jobs report, for further clues about the Fed’s policy intentions. Any signs of stronger economic growth or rising inflation could lead to a rebound in the dollar.