Dollar remains under pressure as traders focus on US PPI, BoC policy

The US Dollar (USD) remained under bearish pressure during the European session on Wednesday after weakening against its major counterparts in the previous session.

It was trading around 100.80.

Market participants turned their focus to upcoming economic data and central bank decisions.

The US Bureau of Labour Statistics is set to release the June Producer Price Index (PPI) later in the day, while the Bank of Canada (BoC) is scheduled to announce its latest monetary policy decision.

Markets await key US inflation data

The US Dollar continued to face selling pressure after weakening broadly on Tuesday.

Investors shifted their attention to the release of the June PPI report, which is expected to provide further insight into inflation trends in the United States.

The inflation data follows a softer-than-expected US Consumer Price Index (CPI) report for June, which prompted traders to reassess expectations for future Federal Reserve (Fed) interest rate decisions.

The repricing of rate expectations weighed on the greenback across major currency markets.

Major currency pairs trade in tight ranges

The Australian Dollar struggled to extend its strong gains from the previous session.

The AUD/USD pair traded within a narrow range below the 0.6700 mark during the European morning, indicating cautious market sentiment ahead of the scheduled economic releases.

Meanwhile, the EUR/USD pair entered a consolidation phase after advancing approximately 0.4% on Tuesday.

The pair remained above the 1.1400 level in the European session as investors awaited Eurostat's Industrial Production data for May, which was scheduled for release later in the day.

The British Pound also held onto recent gains.

GBP/USD traded steadily around the 1.3400 level after ending Tuesday's session in positive territory.

The pair showed limited movement as traders refrained from taking large positions before the release of key US inflation data.

In Japan, the USD/JPY pair recorded marginal losses on Tuesday despite the broad-based weakness in the US Dollar.

During early European trading on Wednesday, the pair fluctuated within a narrow range above the 162.00 level.

Focus turns to Bank of canada policy decision

Attention also remained on the Bank of Canada's monetary policy announcement.

The BoC was widely expected to leave its benchmark policy interest rate unchanged at 2.2% following its July meeting.

Ahead of the decision, the USD/CAD pair stabilized around the 1.4050 level during the European session after declining roughly 0.7% in the previous trading session.

Market participants awaited the central bank's policy statement and any guidance that could influence expectations for future interest rate moves.

Indian rupee extends gains

The Indian Rupee (INR) strengthened further against the US Dollar on Wednesday after posting notable gains over the previous three trading sessions.

The USD/INR pair declined to around 96.11 as continued selling pressure on the US Dollar supported the local currency.

The Rupee's appreciation came after traders adjusted Federal Reserve interest rate expectations in response to the softer-than-expected June US CPI data, which reduced demand for the US Dollar across global markets.