Home›Forex›Major Pairs›Dollar hits lowest in over two months as rate-hike bet…

Dollar hits lowest in over two months as rate-hike bets fade

Traders cut the probability of a September Fed rate increase to 30.8%, down from 52.2% a week earlier, lifting the euro and stabilizing the yen.

Monday, August 17, 2026 · Written up by our desk · Major Pairs

The U.S. dollar slid to its lowest level in more than two months on Monday as traders dialed back expectations for a Federal Reserve rate hike, citing a streak of softer U.S. economic data. Reuters reported the move left the dollar index at its lowest since early June, while the euro rose to a two-month high.

In currency trading, the yen strengthened 0.2% to around 159.04 per dollar, with market participants brushing aside weaker-than-expected Japanese growth figures. The dollar held below four-decade lows reached in late July before Japanese and U.S. authorities intervened to curb yen weakness.

The shift also comes as investors look ahead to the Fed's Jackson Hole symposium next week for clues on how policymakers interpret the latest data. Reuters said markets are focused on whether the Bank of Japan will raise rates soon, after the U.S.-Japan intervention changed yen dynamics without removing the interest-rate pull behind carry trades.

In assessing Fed timing, traders pointed to changes in rate-implied probabilities from CME FedWatch. Reuters cited expectations for only a 30.8% chance of a rate increase at the Fed's September meeting, compared with 52.2% a week earlier, after data including a surprise drop in retail sales and benign inflation led markets to reduce urgency for additional hikes.

Latest closeDollar index 99.64 ▼0.3%

More like this

Sources