U.S. Dollar Depreciates Amid Cooler-than-expected Inflation Data

(RTTNews) - The U.S. dollar came under pressure during the New York session on Wednesday, as the nation's consumer inflation slowed more than expected in March, supporting expectations that the Federal Reserve could pause its policy tightening after the next meeting in May.

Data from the Labor Department showed that the consumer price index inched up by 0.1 percent in March after climbing by 0.4 percent in February. Economists had expected consumer prices to rise by 0.3 percent.

The report also showed the annual rate of consumer price growth slowed to 5.0 percent in March from 6.0 percent in February.

The year-over-year growth was slower than the 5.2 percent expected by economists and marks the smallest 12-month increase since May 2021.

The report said core consumer prices, which exclude food and energy prices, rose by 0.4 percent in March after advancing by 0.5 percent in February. The increase matched economist estimates.

The annual rate of growth by core consumer prices accelerated to 5.6 percent in March from 5.5 percent in February, which was also in line with expectations.

The minutes from the Fed's March policy meeting are due to be released later today, which could offer hints on the rate path.

The benchmark yield on the 10-year note fell to 3.424 percent. Yields move inversely to bond prices.

The USD/CHF pair fell to nearly a 2-year low of 0.8961. At Tuesday's close, the pair was valued at 0.9032. The greenback is seen finding support around the 0.87 mark.

The USD/JPY pair dropped to a 2-day low of 132.73, from a 4-week high of 134.04 seen in the Asian session. The pair was worth 133.67 when it ended deals on Tuesday. The greenback may face support around 129.00 the region, if it falls again.

The greenback weakened to more than a 2-month low of 1.0989 against the euro and a 6-day low of 1.2478 against the pound, from yesterday's closing values of 1.0909 and 1.2424, respectively. The greenback is likely to challenge support around 1.12 against the euro and 1.27 against the pound.

The USD/CAD pair touched a 1-week low of 1.3432. The greenback was trading at 1.3464 per loonie at yesterday's close. Further fall in the greenback may find support around the 1.32 mark.

The greenback declined to a 6-day low of 0.6723 against the aussie and a 2-day low of 0.6242 against the kiwi, from yesterday's closing quotes of 0.6653 and 0.6185, respectively. Next key support for the currency is likely seen around 0.69 against the aussie and 0.64 against the kiwi.

The Fed minutes from the March 21-22 meeting are set for release at 2:00 pm ET.