Is the American dollar going down? The dollar accelerated its fall against major currencies Thursday as traders lowered bets on an aggressive Fed borrowing cost increase following softer-than-expected U.S. inflation data a day earlier.

The dollar index to a basket of six major currencies, DXY fell 0.19% to 104.993. A day earlier, the greenback recorded its biggest daily drop of 1% over the previous day.

Why is the dollar going down against the euro? The dollar fell after the release of the US inflation data, with consumer prices unchanged in July compared to a 1.3% month-on-month increase in June. The July statistics came in lower than expected due to a sharp drop in gasoline prices, leading markets to believe again that the inflation ceiling is near.

The Fed is still “very, very far from declaring victory” over inflation, Minneapolis Fed Chairman Neel Kashkari said after the CPI release. He said the need to raise the Fed’s key rate to 3.9 percent by the end of this year and to 4.4 percent by the end of 2023 has not changed since the data release.

“Yesterday’s statistics clearly signaled a reduced likelihood of a further aggressive move by the Fed (+75 basis points) and hence helps reduce demand for the dollar, but equally, we believe that this data alone is not enough for a subsequent sell-off in the currency,” MUFG currency analysts said.

Earlier we reported that FX rate EUR/USD depends on US CPI.