US Dollar plunges following soft CPI, markets await FOMC clues

USD pauses uptrend after the release of soft US inflation. Greenback to rely on FOMC meeting to dictate its next move. Investors expect hawkish hold with US central bank keeping rates at 5.25-5.50% range. On Wednesday, the US Dollar Index saw a downward trend following the release of US Consumer Price Index data and ahead of the Federal Reserve’s Federal Open Market Committee decision.

It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

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