The US dollar weakened on Tuesday, July 14, 2026, after fresh inflation data showed price pressures in the world’s largest economy eased more than expected, reducing expectations of an immediate interest rate hike by the US Federal Reserve.
The fall came despite heightened geopolitical tensions in the Middle East, which had initially pushed oil prices sharply higher following fresh attacks near the Strait of Hormuz.
However, crude prices later retreated after US President Donald Trump softened plans to impose a proposed 20 per cent levy on vessels passing through the strategic shipping route.
The easing in oil prices, combined with softer inflation figures, weighed on the greenback as investors scaled back expectations of tighter monetary policy.
Inflation data changes market expectations
Per the US Labour Department, consumer inflation slowed to 3.5 per cent year-on-year in June, down from 4.2 per cent in May, marking the sharpest moderation in price growth in six years.
Core inflation, which excludes food and energy prices, also eased to 2.6 per cent from 2.9 per cent a month earlier, reinforcing expectations that inflationary pressures may be easing.
Kathleen Brooks, Research Director at trading platform XTB, said the latest figures significantly reduced the likelihood of a Federal Reserve rate hike at its July policy meeting.
After the release of the inflation report, market expectations for a July rate increase plunged from around 40 per cent earlier in the day to just 13 per cent. However, investors still expect the Fed could raise rates at its September meeting.
