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US dollar slips as risk sentiment improves and Fed hawkishness fades
Wednesday's focus includes US private employment data and the ISM Services PMI for July, with WTI stabilizing near $74 after a nearly 6% drop on Tuesday.
Risk sentiment dominated early trading on Wednesday as investors grew more optimistic about a diplomatic solution to the Middle East conflict, weighing on the US dollar, FXStreet reported.
The US Dollar Index logged small daily losses, remaining below 100.00 in the European morning, while markets also pointed to mixed momentum in US stock index futures.
In the background, Federal Reserve Bank of Kansas City President Jeff Schmid delivered a hawkish message, arguing current policy is not tight enough and that inflation remains too high to ignore, which FXStreet said helped underpin a bias against a premature pivot for the dollar.
Commodities and the broader risk backdrop also shifted, with crude oil slipping sharply on Tuesday after news suggesting activity in the Strait of Hormuz would resume; WTI fell nearly 6% before stabilizing around $74 early Wednesday, as the US dollar outlook stayed under pressure from risk flows.
Latest closeWTI crude $75.32 ▼6.2%|Dollar index 99.88 ▼0.1%