The dollar has come under selling pressure after last week’s Federal Reserve meeting

The dollar index edged down on Friday, hitting a near five-month low as data showed annual US inflation slowed further below 3% in November, cementing market expectations for a US interest rate cut next March.

In the 12 months through November, inflation, as measured by the personal consumption expenditures (PCE) price index, stood at 2.6%, easing from 2.9% in October.

Excluding the volatile food and energy components, the so-called core PCE price index advanced 3.2% year-on-year in November, the smallest rise since April 2021. The Federal Reserve tracks the PCE price measures for its 2% inflation target.

“The market will view the data as very much adding weight to the Fed’s recent tilt towards an easier monetary stance,” said Stuart Cole, chief macro economist at Equiti Capital.