The US dollar is struggling to recover from the fall recorded after seeing the reading of US inflation data in July.
The US consumer price index (CPI) unexpectedly rose more slowly than expected with an 8.5% year-on-year increase last month, missing market forecasts for an 8.7% increase.
The published reading was also down from the 9.1% increase recorded in June.
This caused the US dollar to shrink lower after investors reduced expectations for an aggressive interest rate hike by the Federal Reserve (Fed) from 75 basis points to 50 basis points.
At the time of writing, the dollar index, which measures the strength of the greenback, was trading lower at 105.00 in the European session.
A new focus for investors is now directed to the release of the US producer price index (PPI) data in the New York session today which is expected to also record a slower increase last month.
Among the currencies that have benefited from the decline, is the euro which has surged to a 5-week high against the US dollar.
Meanwhile, the pound also rose higher as investors awaited the publication of UK economic growth data for July and the second quarter on Friday.
On the other hand, the Aussie, Canadian and New Zealand dollar commodity currencies continued to advance higher following the decline of the US dollar.
In the meantime, yen trading also increased significantly but its movements were somewhat limited due to the US 10-year bond yield which returned to stability after shrinking to a low level.
