The dollar index traded around 103.5 on Tuesday, hovering close to levels not seen since early January, with hotter-than-expected US inflation dashing hopes that the Federal Reserve will soon end its tightening campaign. The annual inflation rate in the US slowed only slightly to 6.4% in January from 6.5% in December, less than market forecasts of 6.2%, suggesting that getting inflation under control will take more time than expected.
At the same time, a chorus of Fed officials reaffirmed their commitment to bring down inflation with more rate increases. The most pronounced selling activity was against the euro and the British pound. On the flip side, the dollar appreciated against the Japanese yen following the surprise nomination of Kazuo Ueda as the next Bank of Japan governor.