U.S. Dollar Falls On Fading Fed Rate Hike Hopes

(RTTNews) - The U.S. dollar weakened against other major currencies in the European session on Tuesday, due to declining expectations of Federal Reserve (Fed) rate rises and worries over AI overinvestment.

Investors come to terms with the fact that the US central bank will stand pat on rates at next week's monetary policy meeting. The odds for a quarter-point rate hike have dropped to 17% from nearly 60% last week, according to data by the CME's Fed Watch Tool, after some Fed officials affirmed that they need more time to assess the impact of September's hike.

Concerns over AI-related valuations and data showing a sharp acceleration in Germany's producer price inflation added to the USD decline.

In the European trading today, the U.S. dollar fell to 158.04 against the yen, from an early 6-day high of 158.60. The greenback may test support near the 155.00 region.

Against the euro and the pound, the greenback slid to 4-day lows of 1.1235 and 1.3359 from early highs of 1.1208 and 1.3309, respectively. If the greenback extends its downtrend, it is likely to find support around 1.13 against the euro and 1.35 against the pound.

Against the Swiss franc, the greenback slipped to 0.8243 from an early high of 0.8269. The next possible downside target for the greenback is seen around the 0.81 region.

The greenback dropped to a 6-day low of 0.6999 against the Australian dollar, from an early high of 0.6970. On the downside, 0.70 is seen as the next support level for the greenback.

Against the New Zealand and the Canadian dollars, the greenback slid to near 1-month lows of 0.5689 and 1.4053 from early highs of 0.5661 and 1.4106, respectively. The greenback is likely to find support around 0.58 against the kiwi and 1.39 against the loonie.

Looking ahead, U.S. ADP employment data, U.S. building permits, housing starts and pending home sales, all for September, are slated for release in the New York session.