The U.S. dollar slipped against its major opponents in the European session on Tuesday, as U.S. consumer inflation grew in line with economist estimates in February, adding to hopes that the Fed is likely to proceed with gradual interest rate hikes this year.

Data from the Labor Department showed that the consumer price index rose by 0.2 percent in February after climbing by 0.5 percent in January. Economists had expected consumer prices to rise by 0.2 percent.

Core consumer prices, which exclude food and energy prices, also edged up by 0.2 percent in February following a 0.3 percent increase in January. The uptick in core prices also matched expectations.

The annualized rate of core inflation was up only 1.8%, once again short of the Federal Reserve's 2% target.

The data supported hopes that the Fed is likely to hike interest rates gradually.

News that the U.S. President Donald Trump has fired Secretary of State Rex Tillerson dampened investor sentiment.

Trump announced on Twitter that he would replace Tillerson with Mike Pompeo, the director of the Central Intelligence Agency (CIA).

The greenback traded mixed against its major rivals in the Asian session. While it rose against the yen and the pound, it held steady against the franc and the euro.

The greenback declined to a 2-week low of 1.3965 against the pound, after having advanced to 1.3875 at 5:15 am ET. The next support for the greenback is likely seen around the 1.43 level.

Reversing from an early high of 1.2315 against the euro, the greenback slipped to a 5-day low of 1.2386. The greenback is seen finding support around the 1.26 region.

The greenback fell to a 5-day low of 0.9438 against the franc, from a high of 0.9494 hit at 4:00 am ET. On the downside, 0.93 is seen as the next support level for the greenback.

The greenback slipped to a new 2-week low of 0.7894 against the aussie and near a 3-week low of 0.7348 against the kiwi, off its early highs of 0.7859 and 0.7290, respectively. If the greenback falls further, 0.81 and 0.75 are likely seen as its next support levels against the aussie and the kiwi, respectively.

Following a 4-day high of 1.2877 hit at 8:15 am ET, the greenback reversed direction and edged down to 1.2831 against loonie. The greenback is poised to find support around the 1.27 level.

The greenback retreated to 106.71 against the yen, from near a 2-week high of 107.29 hit at 8:30 am ET. This may be compared to a 4-day low of 106.25 set early in the Asian session. The greenback is seen finding support around the 104.00 level.

Data from the Bank of Japan showed that Japan producer prices were flat on month in February. That was shy of expectations for an increase of 0.2 percent and down from 0.3 percent in January.

Looking ahead, at 10:15 am ET, the Bank of Canada Governor Stephen Poloz delivers a speech titled "Today's Labour Market and the Future of Work" at Queen's University in Ontario.

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