The dollar slid to the day’s lows against a currency basket on Tuesday after data showing that inflation remained tepid last month dampened expectations for a faster pace of rate hikes from the Federal Reserve this year.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.16% at 89.75 by 08:51 AM ET (12:51 GMT), after rising as high as 90.10 earlier.
The Labor Department reported that the consumer price index rose 0.2% from February and was up 2.2% from the same month a year earlier, in line with economists’ forecasts.
Core CPI, which excludes food and energy costs, rose 0.2% in February and was up 1.8% from a year earlier, also in line with the consensus forecast.
The lack of an upside surprise tempered expectations that the Fed could raise interest rates four times, rather than three times, this year after data last week pointing to a slowdown in wage growth last month, despite strong jobs growth.
The dollar came under additional selling pressure following reports that U.S. President Donald Trump fired Secretary of State Rex Tillerson. The reports added to concerns over political instability in Washington.
The euro rose to the day’s highs, with EUR/USD adding 0.24% to trade at 1.2379.
Sterling also moved higher against the softer dollar, with GBP/USD climbing 0.4% to 1.3957.
In the UK, Chancellor Philip Hammond was delivering the spring budget statement to parliament, where he revised up growth forecasts for 2018, but cut the growth forecast for 2019 and 2020.
The dollar pared back some gains against the yen, with USD/JPY last up 0.37% to 106.85, off an earlier high of 107.28.
The Japanese currency was pressured lower amid a growing cronyism scandal linked to the Japanese prime minister and his wife involving the sale of public land.