The dollar index fell by -0.24% on Wednesday due to a rebound in equity markets, reducing demand for the dollar. The chances of a Fed rate cut later this month increased after Jul JOLTS job openings fell to a 10-month low.

US Jul JOLTS job openings dropped to a 10-month low of 7.181 million, weaker than expectations of 7.380 million, indicating a softer labor market.

Fed Beige Book hinted at stagflation, noting little change in economic activity and declining consumer spending due to flat wages. Tariff-related price increases were reported across districts, impacting input prices.

Fed Governor Christopher Waller suggested cutting interest rates at the next meeting to prevent a sharp slowdown in the job market and address inflation concerns.

Concerns over Fed independence grew after President Trump’s move to fire Fed Governor Lisa Cook, which could lead to capital flight and a loss of faith in the dollar.

Federal funds futures predict a 95% chance of a -25 bp rate cut at the September FOMC meeting, with a 56% chance of a second cut in October.

EUR/USD rose by +0.15% on Wednesday, supported by dollar weakness and stronger-than-expected Eurozone July PPI data.

Eurozone July PPI showed a +0.2% y/y increase, slightly stronger than June, while Aug S&P composite PMI was revised lower to 51.0.

Diplomatic efforts to end the war in Ukraine remain elusive, impacting the euro. Geopolitical tensions could have macroeconomic implications for Europe.

Swaps indicate a 1% chance of a -25 bp rate cut by the ECB at the September 11 meeting.

Read more at Yahoo Finance: Dollar Falters and Gold Soars as Fed Rate Cut Chances Increase