The dollar index eased further below 108 on Monday as traders reassessed the Federal Reserve’s policy tightening path and dialed back expectations for a bigger 100 basis point point rate hike that previously emboldened dollar bulls. Atlanta Fed President Raphael Bostic and St. Louis’s James Bullard signaled on Friday that they are on track to raise rates by 75 basis points for the second month in a row at the July 26-27 meeting, pushing back against speculations for a larger full percentage point increase.
Investors also assessed mixed economic data, with US retail sales coming in better-than-anticipated for June, while consumer inflation expectations softened in July. Meanwhile, the dollar remains close to its highest levels in 20 years, underpinned by a relatively more aggressive US monetary tightening and safe-haven inflows spurred by global recession fears.